Do I need to form an LLC?

Question

Hello, I am new to the investment world and I am trying to take action on my business. I have attended Guru seminars that strongly advised that an LLC be established before conducting business. After reading some forums in BP I am seeing mixed opinions. So the question is do I need to set up an LLC as a beginner with no assets?

Federico Gutierrez · Answer

You don't need an LLC. If you are going to try get a residential loan from a bank they won't lend to an LLC. Only to your personal name

Jennifer Stanley · Answer

I would talk to an attorney in your area.  I've wasted money forming the wrong entity for different business purposes.  (However, I am in California, so what makes sense to every other state, doesn't always hold true here!) It will cost you a few hundred dollars but could save you more money and headache later.  If you are a do it yourself-er like me, you can just do a consult and then do the actual filing yourself.  One thing I have learned is if you are going to do something Pro, hire other pros to get things done right.  You don't want to mess around with business formation and taxes!!

Matt Motil · Answer

Like Fed said, if you're trying to get residential financing, an LLC will hurt you, not help you. Getting an LLC is a step to take when you have a lot of assets to protect. An umbrella insurance policy for 2-3 million runs a few hundred dollars a month. If you need more asset protection than that, then you are ready to consider an LLC.

It will make you feel more legit, so there's always that too, but not necessary in the beginning.

Terry Wyche · Answer

Thank you Both for your input!

Roger P. · Answer

Hi Terry,

I am considering the same thing.  I think I may go ahead and do it on LegalZoom.com and just get it over with so I don't have to rush it if I'm about to make a deal and realize I need it last minute.  Although, I'd consider forming a relationship with a local attorney in case I need to make other transactions which would require something only a lawyer could do, such as buying a multi-family and converting each unit into separate parcels for sale.  That's another thing I'd like to seek on BP, is finding a local attorney in Cleveland that is experienced in a variety of real estate transactions.  One more tool in the toolbox that maybe a LegalZoom can't provide as well as a face to face local?  Maybe we could get some feedback on that as well.

Do I need to form an LLC?

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