Setting up a RE Investment LLC

9 Replies

Hello all! I was wondering if anyone knows if I can setup an LLC by myself with just paying my state fee (125 bucks in PA) and then once I start to generate some capital have a RE Attorney look at it and make any changes/ adjustments to it at that time? I don't really have the bread to have an attorney set it up for me now but I'm sure that once I get a few wholesale deals done I can have one look at my setup and advise me of any changes I should make to the LLC.

Yes. Setting up an LLC is very simple especially if your the only member. Get the forms from the state website. You wont even need the attorney to look at it later.

Setting up an LLC is pretty straightforward. Hard to mess it up (your Secretary of State likely won't let you mess it up :)...

That said, here are the two parts that are important that can be messed up:

1. The Operating Agreement. This is the document that lays out the roles, rights and responsibilities of those in the company and how the company can (and cannot) operate. If you have partners, this is VERY important. If it's just you, this is less important, but if you don't have anything, you're likely not getting much protection with your LLC. At least find a boilerplate Operating Agreement online (or from another investor) and start there.

2. The tax election. Single member LLCs are by-default disregarded entities from an IRS perspective. But, they can elect to be taxed as other types of entities (C-Corp, S-Corp, Partnership, etc). In some cases, you can go back and change an election, but it will depend on timing. This is something you'd consult a CPA/Enrolled Agent/Accountant about, not an attorney.

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Yes, it is. I just finish setting mine up. I went a different way. I set mine up out of Nevada (laws are different). Once I start making some deals I will file in my state of MA.

Check out LegalZoom or other similar sites. For a single member entity, they work great. You will get correct filing and a legit operating agreement (to J Scott's point).

I've asked several attorney's about the online providers and they've all said that they work fine for single member entities (or an entity with you and your spouse) but if there are other partners, the operating agreement is critically important and you will need an actual attorney to help you with it.

Good luck.

Don't worry about corporate entities so much and go out and try to get some deals.

If you don't have a couple hundred dollars to talk to an attorney to get you a solid OA in place for you then asset protection probably isn't something you should be spending a lot of time on until you do some deals.

Originally posted by @Jeffrey Morris :
Yes, it is. I just finish setting mine up. I went a different way. I set mine up out of Nevada (laws are different). Once I start making some deals I will file in my state of MA.

If you ever take title to a property in the name of the LLC it will need to be registered in the state. I'm not sure if you are only assigning contracts. Though my guess is once it comes time to file your state income tax the department of revenue might see you are doing business in MA without a registered LLC.

I don't know but I would NOT be surprised if they would punitively impose the filings fees you didn't pay. No tax or legal advice but I would consult my tax advisor on that.

BTW I have never heard anyone say there is any benefit to setting up your entity in a different state than the one you are working in for a RE business, other than the people that are selling the out of state entity services.

Originally posted by @Jeffrey Morris :
Yes, it is. I just finish setting mine up. I went a different way. I set mine up out of Nevada (laws are different). Once I start making some deals I will file in my state of MA.

You will still likely have to register the LLC as a foreign LLC within your home state. And you'll certainly need to pay MA taxes if you're doing work in that state, regardless of where the LLC is registered.

Registering in a different state causes more headache than it saves, in my opinion...