If you're new to the landlord game...this is one of the first of many important steps you'll need to take to protect yourself as well as your assets. Running your building is like running a business...well, because it is a business.
Moving forward in real estate, you'll want to always keep the worse case scenario in mind so you know how to prepare for situations that may arise.
3 Reasons You Should Start an LLC
1. Starting an LLC separates you from your business -In this case, if someone sues you...your personal assets won't be at stake.
2. Professionalism - Having an LLC for your real estate portfolios keeps you reputable as an investor.
3. Tax Benefits - Investors are eligible for many tax benefits during tax season.
How to Start an LLC
Decide which state you want to start your LLC in (if you choose a state outside of yours, you will need to assign a registered agent.)
Search for your states rules on starting an LLC (usually a ".gov" website)
Choose your business name (search your states database to make sure the name is not already taken)
Submit Articles of Organization form
Search your states requirements on licensing for your business
Apply for an EIN number through irs.gov
Bonus Tip: Open business banking account once all documents are approved.
FAQ:
Q: Should I hire a third party company to file my LLC?
A: Filing an LLC yourself is rather easy if you follow the instructions however if you are not confident and are not familiar with legal documents there is nothing wrong with using a third party company. Better safe than sorry!
Q: When should I file my LLC?
A: Its best to file as soon as possible especially if you own your property already.
Q: What is a good third party company to use for filing my LLC?
A: Legal zoom is a great website that handles everything from A-Z for your filing needs. They also have a lot of great resources post LLC approval. They can be a bit pricey, but worth it if you don't want to go through this process alone.