Hello everyone,
I am a new real estate entrepreneur in the process of creating a magnificent business plan. I will invest into apartments or condos and then manage the properties. I have made the decision to chose an LLC for my legal entity. IS THIS the CORRECT PATH!!! So far my research leads me to believe that it is. Below is for people like my self with that passion and drive to succeed. If you are interested in starting your own LLC, a great website to start is https://www.sba.gov/content/limited-liability-comp....
Always remember to ask your self 'WHY". The reason you choose to start investing in real estate should be much more than passive income. I started out only thinking of passive income. My sense of "Why" has truly evolved once I found that passion will fuel my fire much longer and more fierce than money. I recommend that all beginners search for there passion of "WHY".
-Ask Us Why
Below is what I am using as a guideline, please visit the website if you have more questions.
Limited Liability Company
A limited liability company is a hybrid type of legal structure that provides the limited liability features of a corporation and the tax efficiencies and operational flexibility of a partnership.
The "owners" of an LLC are referred to as "members." Depending on the state, the members can consist of a single individual (one owner), two or more individuals, corporations or other LLCs.
Unlike shareholders in a corporation, LLCs are not taxed as a separate business entity. Instead, all profits and losses are "passed through" the business to each member of the LLC. LLC members report profits and losses on their personal federal tax returns, just like the owners of a partnership would.
Forming an LLC
While each state has slight variations to forming an LLC, they all adhere to some general principles:
Choose a Business Name. There are 3 rules that your LLC name needs to follow: (1) it must be different from an existing LLC in your state, (2) it must indicate that it's an LLC (such as "LLC" or Limited Company") and (3) it must not include words restricted by your state (such as "bank" and "insurance"). Your business name is automatically registered with your state when you register your business, so you do not have to go through a separate process. Read more here about choosing a business name.
File the Articles of Organization. The "articles of organization" is a simple document that legitimizes your LLC and includes information like your business name, address, and the names of its members. For most states, you file with the Secretary of State. However, other states may require that you file with a different office such as the State Corporation Commission, Department of Commerce and Consumer Affairs, Department of Consumer and Regulatory Affairs, or the Division of Corporations & Commercial Code. Note: there may be an associated filing fee.
Create an Operating Agreement. Most states do not require operating agreements. However, an operating agreement is highly recommended for multi-member LLCs because it structures your LLC's finances and organization, and provides rules and regulations for smooth operation. The operating agreement usually includes percentage of interests, allocation of profits and losses, member's rights and responsibilities and other provisions.
Obtain Licenses and Permits. Once your business is registered, you must obtain business licenses and permits. Regulations vary by industry, state and locality. Use the Licensing & Permits tool to find a listing of federal, state and local permits, licenses and registrations you'll need to run a business.
Hiring Employees. If you are hiring employees, read more about federal and state regulations for employers.
Announce Your Business. Some states, including Arizona and New York, require the extra step of publishing a statement in your local newspaper about your LLC formation. Check with your state's business filing office for requirements in your area.
