Is it stupid to have my name in my LLC?
Fort Wayne IN, USA · Member since 2018 · 52 posts · 27 votes
My original idea was to have my Last name in the business name for the entity that would be managing my properties. The properties themselves would be in separate LLCs. My question is if this is a stupid idea. Others have told me in past forum posts that it would make it easier to "pierce the veil" in a lawsuit. From a quick read I just did I don't see how that's possible. My understanding is that that the whole purpose of an LLC is to keep things separate from myself in a financial sense. Could something so simple as having my last name on the LLC really allow someone to go after my personal assets? I am really confused on all this. Please help.
@Brandon Handel those people are absolutely wrong. As i told you elsewhere, having your name in the LLCs name has nothing to do with "Piercing the Veil". However there are many things that could cause piercing the veil.
A great example would be your LLC is named Brandon Handel LLC. You sign documents Brandon Handel. You just pierced the veil yourself. You need to sign Brandon Handel, Member, Brandon Handel LLC. (The word "member" could be any appropriate company title) That is an entirely different issue then your name in the LLC. That mistake could cause problems regardless of the name of your LLC.
@Brandon Handel part of the benefit of an LLC is one extra layer to mask the business from the owner. Let's say the tenant is renting from Brandon Handel LLC and you are dealing with them, signing documents Brandon Handel. It is pretty obvious you are the owner. It makes you more of a target. Let's say your company is named Oak Street LLC, then tenants could easily think you are just an employee. Any competent attorney could track down the owner of any LLC regardless of the name so it won't totally separate you from the business.
As far as piercing the veil, that happens if you are mixing personal and business. Name should really have nothing to do with it.
Very often when people name a business after themselves it is for their own narcissistic reasons or due to lack of creativity. Personally I would pick the most generic names possible for your LLC. Your business can carry a different name than your LLC. For example you may be doing business as "Ideal Property Solutions" but your business manages five different LLC, Oak Street LLC, Sun Tower LLC, Johnson LLC, My House LLC and Road 1 LLC. Notice how all the names are very different, so it makes it even easier to keep separation between the individual properties.
LLC is for legal protection, not a marketing purposes. Pick LLC names that are very common and not related to your main business name. No reason to make it any easier than necessary for someone to trace all the businesses back to you.
It won’t hurt to keep your name out of it!
Some thoughts:
Disclaimer: While I’m an attorney licensed to practice in PA, I’m not your attorney. What I wrote above does not create an attorney/client relationship between us. I wrote the above for informational purposes. Do not rely on it for legal advice. Always consult with your attorney before you rely on the above information.
@Brandon Handel part of the benefit of an LLC is one extra layer to mask the business from the owner. Let's say the tenant is renting from Brandon Handel LLC and you are dealing with them, signing documents Brandon Handel. It is pretty obvious you are the owner. It makes you more of a target. Let's say your company is named Oak Street LLC, then tenants could easily think you are just an employee. Any competent attorney could track down the owner of any LLC regardless of the name so it won't totally separate you from the business.
As far as piercing the veil, that happens if you are mixing personal and business. Name should really have nothing to do with it.
Very often when people name a business after themselves it is for their own narcissistic reasons or due to lack of creativity. Personally I would pick the most generic names possible for your LLC. Your business can carry a different name than your LLC. For example you may be doing business as "Ideal Property Solutions" but your business manages five different LLC, Oak Street LLC, Sun Tower LLC, Johnson LLC, My House LLC and Road 1 LLC. Notice how all the names are very different, so it makes it even easier to keep separation between the individual properties.
LLC is for legal protection, not a marketing purposes. Pick LLC names that are very common and not related to your main business name. No reason to make it any easier than necessary for someone to trace all the businesses back to you.
This exactly. I don't want my tenants to know that I own. Everyone here on biggerpockets knows that you get crazy tenants. What if you have one that has an A/C break down and you get it fixed within a week, but they sue you because of the turmoil they were put under without a/c for a week. If they know you are the owner, and have a bunch of properties, they may think you are loaded and go after you. If they find some random LLC and don't have the means to figure out who owns the LLC, then they may reconsider. Plus, not being the owner allows for many benefits... one prime example is if a tenant asks to do something and you are not sure, you can just say you need to talk to the owner until you figure out what to do. It allows you a chance to buy time.
@Brandon Handel part of the benefit of an LLC is one extra layer to mask the business from the owner. Let's say the tenant is renting from Brandon Handel LLC and you are dealing with them, signing documents Brandon Handel. It is pretty obvious you are the owner. It makes you more of a target. Let's say your company is named Oak Street LLC, then tenants could easily think you are just an employee. Any competent attorney could track down the owner of any LLC regardless of the name so it won't totally separate you from the business.
As far as piercing the veil, that happens if you are mixing personal and business. Name should really have nothing to do with it.
Very often when people name a business after themselves it is for their own narcissistic reasons or due to lack of creativity. Personally I would pick the most generic names possible for your LLC. Your business can carry a different name than your LLC. For example you may be doing business as "Ideal Property Solutions" but your business manages five different LLC, Oak Street LLC, Sun Tower LLC, Johnson LLC, My House LLC and Road 1 LLC. Notice how all the names are very different, so it makes it even easier to keep separation between the individual properties.
LLC is for legal protection, not a marketing purposes. Pick LLC names that are very common and not related to your main business name. No reason to make it any easier than necessary for someone to trace all the businesses back to you.
This exactly. I don't want my tenants to know that I own. Everyone here on biggerpockets knows that you get crazy tenants. What if you have one that has an A/C break down and you get it fixed within a week, but they sue you because of the turmoil they were put under without a/c for a week. If they know you are the owner, and have a bunch of properties, they may think you are loaded and go after you. If they find some random LLC and don't have the means to figure out who owns the LLC, then they may reconsider. Plus, not being the owner allows for many benefits... one prime example is if a tenant asks to do something and you are not sure, you can just say you need to talk to the owner until you figure out what to do. It allows you a chance to buy time.
Especially in your profession, where you are facing the public. The last thing you need is crazy tenants lurking around your practice! I have a friend with rentals and he uses his personal name for business and lets tenants drop off rent at his $600K house. He had a crazy tenant that started driving by his house really slow. That is exactly why you never give tenants your name or address. Of course a resourceful tenant could find this information, but 99% have no idea where to look. The goal of any protection is to make it harder for people to find you. Nothing is fool proof, but why make it easier.
This same friend never locks his car doors. He said to me, "if they want to get in, they will find a way". I don't follow the logic. Of course someone could smash a window, but most people are lazy and will just look for the easy target. I am not an easy target.
In my reply to your previous post I mentioned that including your name in your LLC "may" undo any good an LLC might provide in separating you from your business. "May" being the operative word there. I'm glad you re-asked the question because these replies have been informative. I did not mean to imply that choosing a different name will provide 100% anonymity or remove the risk of being sued, but I do think that naming it after yourself creates a grey area that MAY make you seem like an easier target for a lawsuit. In my experience grey areas are places where lawyers can make a lot of money so I avoid them wherever possible. All the different opinions on the matter on here further implies a grey area exists. To me the whole point of creating an LLC is to separate oneself from the business and limit personal liability, so naming it eponymously goes against that idea. Do a cost benefit analysis of using your name in the LLC vs. having a totally different name, and decide for yourself. Another thing to consider is whether or not having an eponymous name reduces the possibilities of the company in terms of growth. I wouldn't start a businesses that isn't easily scalable and I always think about being able to step away personally or, even better, sell the business down the road. It may give the business more flexibility if it has a generic title. Just my opinion for what it's worth. For business card and marketing purposes I actually think it looks more impressive to have a business name and then list yourself as "Owner", "Principal", "Founder", "President", "CEO", "COO", etc. Having your name as the business name can come across like a one-man or family small time operation. Of course A.G. Edwards, Audi, Abercrombie & Fitch and many other giant corporations named after their founders are exceptions to this, so who knows maybe Handel Housing will be the next Trump Organization. Then again, Trump has been involved in over 3,500 lawsuits so maybe that comparison actually supports my case! Whatever you name it, the most important thing is that you like the name yourself.
@Steve K. I agree that if you want to step away or sell a business, it is better if the business doesn't hold your name sake. I have known a couple people who named a business after themselves and it made selling it more difficult. One was a realtor who named it something like Johnson Team. He sold the business but mainly just the customer list, because the name equity was tied up in him personally. Another person I know had real troubles when his company sold because he didn't like what they did to the business. He told me, "My name is still on the business, how can they do that?" Ultimately it was his choice to name the business after himself and his choice to sell his name. He literally sold the trademark to his name with the business.
Ultimately there is no value in naming a business after your personal name. The only exception being if you are someone like Michael Jordan, where your name is your brand. The value in most businesses is it's reputation, assets and customers. That can be attached to any name you chose.
@Joe Splitrock I agree with you that there is little value and unnecessary risk in using a personal name for a new business (unless like Michael Jordan you already have a valuable brand built around your name). When I had to evict a crazy tenant with gang ties last year, I was very happy to have the plaintiff in that case be an LLC and the plaintiff's address as our PO Box. It made the whole thing less personal. If you're in RE long enough you'll probably deal with desperate people and lawyers at some point. It doesn't make sense to pay for an LLC, a PO Box, etc. in order to separate oneself from the business and then use a personal name IMO. It's true an LLC doesn't provide full protection and crazy people can still find you, but why make it easier for them? In the case of the eviction I mentioned, I don't think that person was savvy enough to track down my personal residence through all my layers of protection and it made it easier for me to sleep at night. I dealt with them professionally and they were evicted for not making payments to a business. If my name was on the paperwork as the plaintiff evicting them I would probably have been on the top of their mind during that desperate time, and a few minutes on google would lead them right to my doorstep. I keep properties in LLC's and the business is a generic name for that reason. If I needed an impressive business card I would use World Domination Inc. and list myself as "Head Honcho". I find it's better to fly under the radar though.
@Brandon Handel part of the benefit of an LLC is one extra layer to mask the business from the owner. Let's say the tenant is renting from Brandon Handel LLC and you are dealing with them, signing documents Brandon Handel. It is pretty obvious you are the owner. It makes you more of a target. Let's say your company is named Oak Street LLC, then tenants could easily think you are just an employee. Any competent attorney could track down the owner of any LLC regardless of the name so it won't totally separate you from the business.
As far as piercing the veil, that happens if you are mixing personal and business. Name should really have nothing to do with it.
Very often when people name a business after themselves it is for their own narcissistic reasons or due to lack of creativity. Personally I would pick the most generic names possible for your LLC. Your business can carry a different name than your LLC. For example you may be doing business as "Ideal Property Solutions" but your business manages five different LLC, Oak Street LLC, Sun Tower LLC, Johnson LLC, My House LLC and Road 1 LLC. Notice how all the names are very different, so it makes it even easier to keep separation between the individual properties.
LLC is for legal protection, not a marketing purposes. Pick LLC names that are very common and not related to your main business name. No reason to make it any easier than necessary for someone to trace all the businesses back to you.
This exactly. I don't want my tenants to know that I own. Everyone here on biggerpockets knows that you get crazy tenants. What if you have one that has an A/C break down and you get it fixed within a week, but they sue you because of the turmoil they were put under without a/c for a week. If they know you are the owner, and have a bunch of properties, they may think you are loaded and go after you. If they find some random LLC and don't have the means to figure out who owns the LLC, then they may reconsider. Plus, not being the owner allows for many benefits... one prime example is if a tenant asks to do something and you are not sure, you can just say you need to talk to the owner until you figure out what to do. It allows you a chance to buy time.
Especially in your profession, where you are facing the public. The last thing you need is crazy tenants lurking around your practice! I have a friend with rentals and he uses his personal name for business and lets tenants drop off rent at his $600K house. He had a crazy tenant that started driving by his house really slow. That is exactly why you never give tenants your name or address. Of course a resourceful tenant could find this information, but 99% have no idea where to look. The goal of any protection is to make it harder for people to find you. Nothing is fool proof, but why make it easier.
This same friend never locks his car doors. He said to me, "if they want to get in, they will find a way". I don't follow the logic. Of course someone could smash a window, but most people are lazy and will just look for the easy target. I am not an easy target.
I agree completely. There are people who can hire lawyers and all kinds of resources if they want to... but why make it too easy. If the barrier to getting it done is too high, most people will just give up. I prefer to be like you, if I'm going to be a target, I may as well be a hard one :)
It depends on your overall investment plan and growth. Talk to an asset protection attorney. Their are ways to keep your name off and shield you and your assets. Rich people do not own anything, they control it. Their names are not attached to it. You do this by asset protection and setting up Companies and Trusts. But only Asset Protection Attorney's wold now how to do this.
The main goal of AP is to have your name on nothing, but benefit from everything.
It's not just a matter of having your name on the LLC to worry about if that will pierce it or not. That can be done a bunch of other ways. Just having an LLC is a misconception that it alone will protect you. Alone it will NOT just protect you automatically, and the veil can be very easily pierced. I get this question or comment a lot and read it a lot (I have an LLC I am good to go etc). Wrong, you are not, and it does not matter if its a typical LLC, LP or Series LLC. I have structured them all, and litigated against them, and for them. Nobody is perfect, and a lot will depend on the personal view of the judge or bias of the jury (out of our control). A HUGE way to pierce the veil is poor documentation, commingling of funds, failing to adhere to corporate formalities, major deviations from scope of business.
I love insurance and LLC and think that having BOTH is the STARTING point to AP and an AP plan. but as in building a house, it is just the foundation for a stronger house. AP is about creating barriers. Their is no such thing as a bulletproof plan to avoid personal liability so don't get caught up on ur name being on it, unless anamunity is a goal? The more fences and plaintiff and his attorney have to jump through, and the more money they have to spend, or time and resources to get to you, the better protected you are.
An LLC is a useful devise in separating business from personal affairs. But it is just one of the tools in the system that has to be joined properly with other tools from its initial filling to create a legal and enforceable AP system. Otherwise it will be useless.
The goal should be to have insurance and as much as you can get (even an umbrella policy), AND establish an LLC that works with a Asset Management Liability Company, that then works with a Domestic Trust and eventually when you have enough in assets to warrant it (500k-1.5M in assets) a Foreign Cook Trust that can be used if an event tiggers the foreign trust. Then you are protected.
Just having your name on the LLC is not that big a deal, unless you want to be invisible. Then you need a Wyoming Anonymity Trust.