so i want to finally get a name and llc all set up for my business so i can legally be called a business and pay taxes to those lovely irs people :)
anyways, wanted to know if there are any ways that are better than another. i heard that it is a good idea to set up your llc in somewhere like arizna or something? if someone could explain the best way of doing all of this it would be great
The only thing you need(in most states) to set up a business is:
www.irs.gov apply and get a tax id number -- FREE
That is it. No LLC required.
Some localities require a contractors bond and license for construction. or to be a realtor, etc. but to buy and sell, or rent real estate, nothing is required.
i want more than things i NEED. i want things to protect me as well
Protection from what?
Try not to think too much. If you want to wholesale, find a person(persons) with some money who buys distressed properties. Find him/her some deals.
If you buy a property, keep track of all expenses, and income.
If you make some money, have your tax person add it to you tax return(less expenses)
Complexity will happen, and you will realize it and do the things necessary when you get a boatload of properties. But at first keep it simple.
Protection. keep insurance on your properties, including liability. For flips get a Builders risk policy.
By the way, I have been in this business for 11 years. "No name". Just Arlan Potter buying, selling, and renting properties. (along with the wife unit)
Very likely you'll set up your LLC has a disregarded entity for tax purposes so all profits and losses will show up on your personal tax return. Find the Secretary of State or equivalent for your state - you can start there.
protection from being sued.
An LLC provides no protection from being sued.
In some cases (many fewer than most on BP realize), an LLC provides some protection from personal liability. But if you are personally operating an LLC, that veil will be pierced quickly by anyone who wants to try.
So really the utility of an LLC is to provide some level of protection for personally-owned assets due to legal issues arising from a passive investment activity.
Do you have significant personal assets? If no, there are probably better uses for your money than forming an LLC.
If you decide to do it anyway, I believe a NH LLC is $150.
"Nothing" protects you from being sued. Insurance provides someone to defend you and to pay the bill if they find against you in court. Some think that you can protect your free and clear assets from lawsuits with an LLC, but if you are negligent, even that may not protect you.
I have commercial liability insurance on all my properties. That is all that is necessary.
When you get your $1,000,000 in the bank, call an attorney and ask him about protecting your free and clear assets.
do i make the llc in another state like arizona do you know? i heard they have different laws that protects me better, im just not sure if it was arizona. i wouldnt personally operate my llc as you said
i personally dont have any good assets except my car. but since i am working out of my parents home could that effect my parents home or anything?
You do not need an LLC. Go buy a rent house. That will give you a real education.
Your parents are not going to be on the hook for you.
What do you mean you will not be personally operating the LLC? Are you going to use it to hold a buy-and-hold rental that you pay a property manager to manage? If so, maybe it will provide some protection against personal liability. Anything like wholesaling is you personally operating the LLC.
I agree with Arlan, you don't need an LLC. And you certainly don't need one enough to go forum-shopping for other state's LLCs.
For just barely more than the cost of an LLC, you could take a real estate licensing class. Far better use of your time and money.
it was nevada
I promise you that there is nothing magical about a Nevada LLC that will prevent you from being sued for negligent action in New Hampshire.
not prevent me but protect me + taxes. but it looks like i dont need it as of just yet but in the future i will
It will not protect you for any active business you are conducting, and will have no impact on your taxes. Once you have some passive investments, that's when you look at an LLC. Or several.
Derek, you are looking for a simple answer to a complex question. Black Diamond just had an attorney speaking on exactly the topic you are discussing. Sorry you missed it.
First, don't worry about asset protection until you have assets to protect.
Second, nothing will stop you from being sued, as others above have told you. LLCs may or may not keep the assets in that LLC separate from your personal assets. Which you don't have anyway.
Third, if you form a Nevada corp and buy property in NH you will still have to register it in NH. You will then pay Nevada and NH Annual report fees, so where's the advantage in that?
Fourth, LLC's don't impact your taxation.
Fifth, at your point in time, when you buy a property, make sure you have plenty of insurance. That is your first line of defense.
Nothing, however, will protect you from yourself if you don't carefully educate yourself and take the time to research an issue and understand fully the underlying principles. You can read a great deal here on BP about asset protection. There are books written on the subject. You will then be prepared to discuss this on an informed basis with an attorney and an accountant. It's not a one-size-fits-all topic. But regardless, if you haven't done a deal yet, it's all a moot point.
Oh, and as to how to get a business license? You can look it up on NH.gov.
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