Hello BP, My business partner and I recently closed on a deal and are in the final stages of getting it rented. We purchased this property as "individuals" and not apart of an LLC. We do have an LLC set up that we want to put the property into eventually but we are currently not at that point yet. Looking to find out if it would be problematic to open up a business checking account under the LLC and run the real estate transactions through that account (rent, expenses), even through the property wont be listed under the LLC for at least a few months. Trying to avoid tax issues down the line. Has anyone gone through this before?
The way it was explained to me (in my state at least), is that since the LLC is a pass through entity, it won't matter on your taxes. The liability protection aspect of the LLC is a different matter... but I know for sure taking the rent personally and then trying to switch to the LLC will throw any liability protection out the window. Again, as far as taxes are concerned, I don't think there will be any tax implications should you operate your business as the LLC now. The bank will probably charge more fees for a business account, but I can't help you there.
You are required to have a business account if you have an LLC and are trying to maintain the limited liability protection afforded to you.
However, it doesn't appear that the property is in the LLC...therefore - you are already risking your limited liability.
If the property is not in the LLC - you may want to see which option is cheaper.
If the business bank account does not have more sever monthly fees for minimums - I would choose the business account. Otherwise -I'd just get a personal account.
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