Starting my LLC, What avenues should I take?

Question

As I am building my REI brand, I am looking for suggestions on starting an LLC. What companies have others used to get their LLC started? How much is too much to start an LLC? Should I use a S-Corp or not?

Scott Smith · Answer

It really comes down to what you are looking to get out of your entity and whether you want to keep up with the annual requirements of the LLC personally or just pay the provider to take care of it all for you. One of the main things I would encourage investors to do is get a strong understanding of how asset protection fits into real estate investing, and from there to invest the appropriate amount of time/money into protecting their assets - each investor has a different level of risk tolerance. There are a lot of investors on the forums who go overboard and create expensive/elaborate plans for a very small portfolio, while on the flip side (pun intended) there are major investors who still own everything in their own name and one bad lawsuit could sink them.

You can go the DIY route for an LLC and all you will need to really worry about is the annual filing fees and requirements that the state you operate in demands, then keeping up with operating it properly. This is a great resource to review the fees intrinsically involved in forming and operating an LLC. This will require a lot of homework on your part to ensure you both form and operate the LLC correctly, there are many DIY LLCs out there that are no good because people don't do enough homework.

If you do decide to use a provider or attorney to set up an entity for you I would really encourage you to ask around and shop a bit. There are a few basic questions you should screen past them all, and after that you can get a feel for what they offer. Ask them about whether they can provide anonymity on public record, assist you will establishing operating companies and if their entities will roll into any future estate planning if the need arises. You generally get what you pay for, as long as you filter out the random scams, and so if there is a higher price from one provider ask what they offer that is different than their cheaper counterparts.

In regards to how you will want to file the entity (S-Corp) - it would depend on what type of investment you are running. This article covers some of the basic differences between the more commonly used entities.

Hope this helps. Best of luck to you moving forward!

Damon James · Answer

Thank you! Very informative advice.

Matthew French · Answer

following thread..