I will be closing on my first rental property at the beginning of November, and the purchase was made with two partners. We have talked about the possibility of forming an LLC, but are leaning towards not forming one.
My question has to do with the type of checking account we should look at opening - a business account or a personal account. Any recommendations? If we were to go with a business account, but not form an LLC, what type of entity would we need to look at forming?
Thanks in advance for the help.
There's no advantage to a business account in my opinion. Certainly not an advantage big enough to force structuring an entity just to support the bank account. I just use a personal checking account, separate from my other personal accounts, and I labeled it "Rental Properties".
@Ali Boone good to know, thanks!
If you want to build business credit, then an LLC and bank account is a must. If you don't intend to establish this type of credit, a business account isn't really necessary.
Boy I hope you really trust your partners. Would make me a little nervous making a large purchase with large liability and not having an LLC with an operating agreement that described each partners interest in the property.
@Chris Connery The partners are in my immediate family, so definitely trust them.
Good. To answer your question I don’t think it would really do anything for you to have a business account. I’m not sure but the bank may even require it be an actual business with an EIN.
Originally posted by @Account Closed :
Say your brother marries a woman who isnt the salt of the earth type. She just became your partner............................happens all the darn time. No one is happy.
Nice. I have my “partner” ie Family member have their spouse sign away their rights to the property or anything involving the property. I don’t need a divorce of some relative to interfere with my investments. (May sound harsh but sometimes you need a harsh dose of reality).
My concern is more their kids (sister/brother in law) then their spouse.
It's a business, so treat it like one.
I work at a financial institution and you don't need an LLC to establish a business account through my credit union. Many people have business accounts that are simply sole proprietors, partnerships, etc. I don't know if this is still correct procedure, but in the past I've seen business accounts set up as 'John Doe DBA (Doing Business As) John Doe Landscaping'. Other banks or credit unions may have different policies so call around and see if it's advantageous for you versus a personal account.
Thanks for the info, @Brent Murphy