Inspector · Alsip, IL · Member since 2008 · 361 posts · 75 votes
Hi everyone! I want to form an LLC for my new wholesaling business and want to open up a bank account for it. My question is, my credit isn't great right now, and I know that banks are suddenly choosy about who they will open up a checking account with, let alone a business account. Does anyone have any idea if my credit will be a problem in opening up a new business account for this business? Thanks in advance! :cool:
When we buy a property, it is titled into a Land Trust, and the trustee, (manager if you will) is an LLC. Since each property is owned by a separate trust, you are creating a few levels of asset protection.
1 Each asset is owned by an individual entity (separate trusts)
2 Finding who owns an LLC is pretty easy.. however finding who owns the trusts.. much more difficult.
Great! Thanks guys I appreciate the input. Another entity question for ya... If I were to get my company set up as an LLC through an attorney and registered and all of that, would I also need to go to my county recorder and do the whole "operating under an assumed name" thing where I have to post the company name in 3 consecutive legal notices, or would the submission of the LLC be sufficient to have an up and running company?
Great Greg! Thanks so much for the info. It's reassuring to hear that from an attorney. Anyone know about how much it would cost to get one of those set up?
:cool:
When we buy a property, it is titled into a Land Trust, and the trustee, (manager if you will) is an LLC. Since each property is owned by a separate trust, you are creating a few levels of asset protection.
1 Each asset is owned by an individual entity (separate trusts)
2 Finding who owns an LLC is pretty easy.. however finding who owns the trusts.. much more difficult.
If you are doing wholesaling then you are going to be taxed as a real estate dealer. Due to the way dealers are taxed it is more likely your best tax benefit would be with a Corporation that elects subchapter s status. The reason for this is that wholesaling income is taxed as ordinary income and not long term capital gains.
So while it is possible to form an llc then elect to have it taxed as a corporation then elect to have that llc that is taxed as a corporation elect subchapter s status, you might want to start with a corporation.
Rather than explain why this is the case I am going to refer you to an excellent article by John Hyre that explains this concept that most investors do not understand. I have no relation to John Hyre except that enjoyed dinner with him a couple of times.
John Hyre's article is an excellent exploration into the different nuances that the IRS will look for on an audit in determining dealer status. Remember, the burden is upon you to prove that you are not a dealer.
I wrote a blog for the site a couple of months ago on the same topic:
What are the implications of being a wholesaler *and* a licensed realtor? Are realtors able to receive assignment fees and/or just commissions?
I'm also an LLC. What should I be aware of to avoid any conflicts of interest with the realty company I'm licensed with? They are a large national chain. I'm brand spankin' new to wholesaling and am reading as much as possible. I haven't come across this topic yet.
Aly, great questions. In an attempt to revive thisa thread to get your questions answered, here is my post.
I am looking into the aspects of your question and will respond shortly.