When you are considering whether to form a Limited Liability Company (LLC) for your business, one of the first questions you may ask yourself is whether you will form the LLC by yourself or with a spouse or maybe a business partner. In our conversations with potential clients, we often hear people say they want to “LLC myself”. This is a common misconception as you are not “LLC’ing” yourself. Setting up an LLC creates a legal entity to hold your business assets in order to protect your personal assets from lawsuits filed against your business.
We see a lot of advice in the online business world about waiting until your income hits a certain level before you form an LLC. I don’t think this is a good idea. In fact, this is bad advice. Making money has nothing to do with risk and liability. If you don’t have a couple hundred dollars to form an LLC, you should consider saving up before starting your online business.
The answer to this question depends on how many properties you own. If you own less than 10, than typically, smart real estate investors setup a new LLC for each property. Once you get over 10-12 properties, managing all of the different LLCs (and their individual bank accounts) can become quite tedious. Once you get to that point, a strategy and entity structure meeting with a savvy real estate attorney is recommended.
To get full liability protection, you need to purchase your property and obtain your financing in the name of the LLC and order for that LLC to protect your personal assets. However, if you’ve already bought property in your personal name and you want to transfer it to the LLC the biggest thing that’s going to hold you up is a mortgage. You need to talk to the lender/the bank.
A Professional LLC (PLLC) is a type of limited liability company formed for the purpose of providing professional services. Professional services are those where a person is licensed by the state for the service they provide. In most states, all members of a PLLC are required to be licensed. Who needs to form a PLLC? It does vary by state, but usually the following professionals will need to form a PLLC…