So you have decided to get into real estate investing and you want to be a landlord, wholesaler, or perhaps the next version of the Property Brothers. Congratulations on taking the plunge and starting your own business. Speaking of starting your own business, what exactly does that mean? What does starting up your own business entail? You have already done the hard part by researching and learning about real estate investing. Research and learning are only part of the puzzle, however. There are a few key steps that you need to undertake to get a basic business off the ground and running. Let’s run through them.
6 Basic Steps to Get Your Real Estate Business Up and Running
1. Pick a Name for Your New Business
Your business name does not have to be anything fancy, but it should say something about what you do. It could be as simple as “Kevin’s Rentals” or “(Your Town) Investments,” but it should also be something that you give a bit of thought to, as hopefully your business will be around a long time and your name will be a brand that you can build upon. You can, of course, change names later on, but it could involve a lot of paperwork and actually be quite costly.
Once you have decided upon a name, you should give it a run through Google. Is anyone else using it? Is there anything close to it? If so, you may want to go back to the drawing board and try again.
2. Decide How to Fund Your Business
The second thing you need to think about and decide upon is how (and with how much) to fund your new business. Many of you will likely fund your new business venture by using some of your own money to cover start up expenses. How much? I do not really know, as it will depend on what you plan to do. If you plan to start a marketing campaign and do some wholesaling, then the amount may be minimal. If your plan is to buy or put down payments on properties, then obviously you will need a lot more.
3. Get a Federal Employer Identification Number
Third, get a Federal Employer Identification Number (EIN) in the name of your new business. This is very simple to do and can be done almost instantly online here. This ID number is a lot like your Social Security Number and will be needed when it come times to file your taxes–and potentially for the next step below.
4. Open a Business Bank Account
After settling on a name, deciding on a funding option and getting an EIN, you need to open a bank account in the name of your new venture and deposit some start up funds. This is relatively easy to do at any bank and is a must for any business owner. You simply have to keep your personal and business funds separate as much as possible.
5. Start a Filing System
You do not necessarily need a filing cabinet at this point (hopefully you will need several in the future!), but again, you should not mix your personal and business matters. A simple shoe box and a couple of file folders labeled “income” and “expenses” might do for now. You can always make this much more detailed as your business grows, but the key is to start a separate system now.
6. Get Business Cards
You will need business cards to hand out to anyone and everyone who can help you. Use some of your start up money to purchase nice looking business cards. Do NOT cheap this out and get those free cards from various sites on the internet. They all look the same and say one thing about you: that you are cheap and do not know what you are doing. Do you really want to say that? Of course you don’t. So spend a little money now on getting some professional looking cards printed up. There are several sites out there that can do this very inexpensively. I would even suggest you spend a little more money and develop a logo for your business. You can easily hire someone on sites like elance.com to do this quickly and cheaply. A logo can make you look much more professional, and it is something you can eventually put on signs, letterhead, shirts, and all sorts of things.
Finally, here are a couple of items you may want to do. First, you may want to incorporate with an LLC or other structure. If you are small, just starting out, and not talking about a huge amount of money, I would not recommend you do this yet. As you grow you may want to, but at the beginning I do not think it is really necessary. On the other hand, if you have a lot of assets and are investing large amounts of money, incorporation is something you may want to seriously consider.
Secondly, consider registering a web domain. You may not be ready for a website yet, but hopefully one day you will be. So why not register Kevinsrentals.com now? Registering the domain does not mean you have to put a website up immediately, but you keep the domain away from another Kevin who has the same idea. Again, this is cheap and relatively easy, and it is something you will likely need in the future.
So there you have it, a simple step by step guide to getting your business off the ground. Now it is all up to you. Get out there and make it happen.
Anything you would add to this list?
Let me know with a comment!