Starting an S-Corp in Illinois

2 Replies

Have been flipping for several years, and now is the time to start protecting myself while growing.

Has anyone in Illinois filed for a S-Corp?  Can you give advice on the process? How Illinois may differ from other states? Is legal zoom satisfactory or should I go a different route?

good juju

Originally posted by @Alex Young :

Has anyone in Illinois filed for a S-Corp?  Can you give advice on the process? How Illinois may differ from other states? Is legal zoom satisfactory or should I go a different route?

Alex:

Our June 19th meeting covered selecting a business entity. Check out my REIA shown below since you are only 12 miles away.

You can start an S-Corp in Illinois by yourself without an attorney or legal zoom. The forms are available from the Illinois Secretary of State's Office. That being said you need to have an attorney review them. Don't have a local attorney I can help you with that connection. You can even have an attorney available 24/7 for less than $40.00 a month.

TITLE: Since you live in Illinois you should use an Illinois Land Trust to take title to all future purchases. This provides you with privacy and avoids probate. You can even change the beneficial interest without recording a new deed. It is not the only asset protection tool you need. It is only the moat around the castle. A land Trust shows up as a strand alone entity when a plaintiff's attorney runs a name search at the county court house. Make sure you name them all differently.

INSURANCE: Get $1 Million in liability on each property. Learn the difference between ACV and RCV or you will be surprised after a loss occurs. ACV = Actual Cash Value or prepare for depreciation. RCV = Replacement Cost Value, which means "IF" the repairs are completed in 6 months or less you get another check to cover the depreciation.  If available get RCV added to your policy.

BUSINESS ENTITY: Your business entity should own nothing and be the "Trustee" for all of your land trusts.

PO BOX: Get one and have all business and tax papers sent there. This is an added level of privacy. It is also tax deductible. If you keep track of mileage for income tax purposes you should get a PO Box as close to home as possible. It can be your first stop and last stop of the day.

RECORD KEEPING: Always make sure you keep minutes of the incorporation meeting (decide on business entity and set up by-laws), shareholders meetings at least annually and give proper notices. You can get a corporate seal at Office Max or Office Depot. Want to save money on that and your other office supplies my contact info is below.

ATTORNEYS: You need to have an attorney represent your business entity in all court actions. Evictions will be your biggest need as you start out. You cannot represent the entity by yourself. Access to an attorney will become very important as you consider this move.

My preference is a C Corp but an S-Corp is also great. Your business entity should own nothing but a check book, land line, business cards and the other 14 requirements to avoid having the corporate veil pierced when a lawsuit comes. 

After you get big enough you should consider establishing a family limited partnership with your existing business entity as the General Partner. K-1s and charging orders make a plaintiff's attorney nervous.

Good Luck and Good Investing