How to Form an LLC to Buy More Real Estate
A limited liability company (LLC) is a smart investment, especially when you are looking to get into real estate. Forming an LLC can protect you and your other investments should anything go wrong at one of your properties. Understanding where to start when forming an LLC is important, and taking the proper steps is vital.
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Instructions
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Look up the laws for your state that determine exactly how your LLC will need to be put together. State requirements vary, and when you want to get involved in real estate investments under an LLC, you must know what your legal protections and obligations are.
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Go to the website for your state's secretary of state to find the forms for establishing an LLC. You don't need an attorney; the forms are relatively simple.
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Talk to your partner if you are entering an LLC under a partnership. You need to have plans in place in case the LLC dissolves.
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Determine whether you need to apply for a federal Employer Identification Number (EIN). If you do, According to the IRS, limited liability companies need an EIN unless the following conditions are met:
1) You report income tax as a branch or division of a corporation or other entity, and the LLC has no employees or excise tax liability.
2) An existing partnership converts to an LLC classified as a partnership.
3) The LLC name or location changes.
4) An LLC that already has an EIN chooses to be taxed as a corporation or as an S corporation.
5) A new LLC with one owner (single-member LLC) is formed under state law, does not choose to be taxed as a corporation or an S corporation, and has no employees or excise tax liability.
You can apply for an EIN at the IRS website, www.irs.gov.
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Submit the LLC application and pay the fee, which will vary by state. It may take several weeks for your LLC application to be processed, but once it has, you will be able to start making investments under the protection of your company.
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Fill out mortgage loans under the name of your LLC. This will help you get the money you need to start investing in real estate without putting your personal assets at risk.
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