When to file for LLC or Stay as a sole proprietor

[Gary Wright]

Hello everyone ! I am very new to Real estate investing and I do not own any properties yet. My question is, should i file for an LLC while i am educating myself  or stay as a sole proprietor and wait until I get my first property?  

[Ashish Acharya]

@Gary Wright , 

No need to dissolve the LLC if you already have it.

Having LLC does not give you any tax benefit. It is an asset protection vehicle if managed properly.

However, generally, if you have a property financed personally, transferring the property in the LLC does no good because you are on the loan. It would be hard to prove that you are treating the asset and the LLC as a separate entity, thus benefit from its separate identity.

Bottom line is unless you have few rentals with high equity, you dont have to think about the LLC.

Since you already have the LLC, dont run anything via LLC just yet. LLC dont have to file a tax return assuming you are some member of the LLC. It is disregarded for the tax purpose.

Even if you have a property in LLC, the activity would be reported on your personal return anyway, so LLC is doing no harm. Just renew the registration each year rather than dissolving it. It might come in handy if you ever get a good deal to flip and use hard money. they usually require LLC.

Good luck.