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Updated about 2 years ago on . Most recent reply

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Tyler Durbin
  • Investor
  • Columbus, OH
3
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With Multiple LLCs - master bank account or individual accounts?

Tyler Durbin
  • Investor
  • Columbus, OH
Posted

I have 3 rental properties all in individual LLCs. My intention is to continue to add to the number of total properties over time. Which LLC/bank account structure is best practice?

A) All LLCs have their own bank accounts.

B) A master bank account to handle all cashflow in/out of the group of LLCs (with appropriate breakout accounting).In this scenario, do I need to create an LLC to get a separate EIN for this biz bank account?

C) Create an umbrella LLC that owns each individual LLC and have a master bank account for the umbrella that handles all cashflow in/out?

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Pete Harper
  • Rental Property Investor
  • Streetman, TX
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Pete Harper
  • Rental Property Investor
  • Streetman, TX
Replied

@David M.

You are correct, this would constitute commingling of funds and likely nullify the legal protection of the LLC's. A good lawyer would pierce the LLC veil.

The way it was explained to me by my attorney is each LLC needs to maintain separate bank accounts and books. If they have different tax ID numbers you can not commingle funds or you nullify the LLC.

There is a LLC structure that will do what you want. Look up Series LLC in the state where you hold the properties. With a series LLC each property goes into its own series. All the series are owned by the same parent LLC with one Tax ID and one bank account. As you buy more properties you simple create a new series.

I’m not a lawyer and don’t play one on TV. Get good local legal advice before proceeding.

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