Guidance on Successful Biz Setup & Organizational Strategies

[Jena Blaszko]

Hi everyone, 

I am interested in hearing from some veterans on how they set up their companies and any organizational tactics that have been successful for you so far. I joined my family's building company, we build a handful of luxury homes a year in northern NJ & the Jersey shore and we are looking to expand. My family has been in the business for nearly 40 years but I feel as if some of the strategies and organization in how we set everything up is a bit antiquated. Our accountant/lawyer suggest we start a new LLC for every property we build. It gets a lot with applications to the state for new builders licenses for each LLC, homeowners warranty setup, insurance, etc. This may be the best way but wondering if any of you have a simpler model of how you set up all of your new construction projects. We have a corporation that is the main "name" of the building business but wondering how others manage this? Also, how do you keep track of all of the expenses paid out to subcontractors/invoices you receive? How do you scan all the bills/invoices to keep in a central location? Do you use a software? Where do you keep all of your subs insurances on file? Any information is helpful!

Thanks so much for your time! 

Jena

[Jason Zundel]

I would strongly echo the recommendations of your CPA/attorney. In fact, rather than make things simpler, I would recommend one more layer of protection. Sorry, I'm an attorney, it's pretty much my job to make things more complicated. In this case though, it will serve you really well to have each of those LLCs that own property be owned by a holding LLC rather than by yourself individually. Some states don't have strong asset protection laws, other states don't allow for anonymous ownership of LLCs, and even others don't give as much protection to an LLC that only has one member. If you created a holding LLC in a state that provides all of those (DE and WY especially) then each one of your LLCs regardless of the state that you're investing in will get the best amount of protection possible. Even better, if you have each of said LLCs elect to be taxed as disregarded, you won't have additional tax filings to worry about and still maintain the protection provided. From there, you can even incorporate your existing corporation to manage all of the properties, run the income, and be the face of the active side of the business for the best of all worlds!

Note: This information is for educational and informational purposes only and does not constitute legal, tax, financial, or investment advice. No attorney-client, fiduciary, or professional relationship is established through this communication.