Oppinions on when to start an LLC

5 Replies

I know what your all thinking, "not another LLC question," but hear me out on this one. =)

I was listening to Michael Quarles podcast the other day and he started talking about getting some Nike polo shirts with your company logo on them as a way of advertising. It got me to thinking however that it might be a great way for me to appear more professional. The fist thing out of every sellers mouth (except one) when I step out of the car is "wow, your young." I know that doesn't affect anything, but I am wondering if I can kill that objection for them before it is posed. 

My previous plan was to wait until I had some deals under my belt before I started an LLC, but now I am thinking I should just do it now. It would allow me to have a company name behind me, and give me more legitimacy when I step out of my car to meet a seller.

My questions are, does this make sense? And, should I file the paperwork myself or hire an attorney to do it for me? I have heard people say that they hired an attorney to do it for them just in case they were ever sued, thinking it would give them greater legal standing then if they had done it on their own. Is there anything to that? 

Thanks,

David

David,

I've started a real estate business myself recently and I set my LLC up before even looking for my first property.

In Virginia, setting up the LLC is straight forward via the State Corporation Commission's website; no attorney needed.

My CPA advised to immediately start keeping receipts, records, etc. Something as simple as driving around looking for homes with a real estate agent is deductible mileage, etc.

Good luck and I hope this helps a little.

Brooks

You can just file your own LLC documents.

http://www.sos.state.mn.us/index.aspx?page=177

Sample Articles of Organizationhttp://www.csb.uncw.edu/people/eversp/classes/BLA361/BusLawForms/Corporate%20Forms/LLC-Operating-Agreement.a%20law%20firm%20version.pdf

I'm not sure you need a company to be taken seriously but, it could help with first impressions. Once people get past your age and realize how knowledgeable you are, I would imagine that would be more important.

Thanks @Greg W. and @Brooks Rembert . I called the Secretary Of State's office, and they said there really is no difference if an attorney fills out the paperwork or not. I couldn't think of any difference myself, but the person who told me that is way smarter than me, so I figured I would check it out. Should have called the SOS's office first I guess.

I know that I don't need to have a company for people to take me seriously, but if by just having an LLC and a "uniform" I stop getting the "your so young" line, it would be worth it to me. It would remove one objection right out of the gate.

You don't need an LLC to be legitimate. You can name your business and operate as a sole proprietorship and avoid the costs and potential registration/upkeep headaches that come with a different entity. Adding "LLC" to the end of your name, for example: Hall & Associates vs. Hall & Associates LLC doesn't really add value in my opinion.

LLC's are meant for asset protection. They are pass through entities, so you can record the same expenses *David listed as a sole proprietor. You don't need an LLC to do these things.

In my mind there are other ways to make yourself sound/feel/look legitimate, specifically being extremely knowledgeable about your business. Being young won't be the cause of you not making deals.

@David Rupp Hi! Legitimate question; although your logic makes sense about starting a company and looking legit, etc, I feel that is more of a personal decision. I started without an LLC and currently operate without an LLC. Based on our properties, our tenants, areas, I don't believe I am in an area that will render folks to sue me. I mitigate risk by choosing properties wisely, and screening tenants properly. Now, this is not a fool-proof plan; although, I know people in this business for 30 years and have done it the same way I have and have yet to see a claim. I have had people lend me money without a filed company in place, like an LLC, and saw ME as the investment, not the business name or whatever. My personal belief is that this is a people business, and although a company and a logo and all that look/sound good, it does not mean YOU are. Focus on yourself, the level of service and returns you can offer to your clients /investors and start there. If you intend create a brand though, then maybe it's a good idea. To me, creating a brand is not so much necessary because this business is not everyone. For those that this business is for, they already know it and dont care if your company is named "blah" or "Blah Blah" They care about returns, and your company name is not going to prove that until you do. Bottom line: keep the dough in the bakery and make bread.

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