We just opened a LLC for our rental property. I have a quick question regarding the LLC bank account. Of course this is where I keep the security deposit from my tenants. I use Venmo to collect rent. Do I need to run the rent money through my LLC bank account before I transfer it to my personal account or can I transfer straight from Venmo to my personal without it ever touching the LLC bank account?
Thanks for your help!
Hey Travis! I'm sure everybody does things their own way, but I'll describe what I've found successful.
I've segmented my rentals into three different groups aligned with various business strategies (SFH, apartments and farm land) and these groups are aligned with three different LLCs. Each LLC has its own bank account and CapEx savings account. I do this so I can treat each as a completely separate business. One day, I may seek to sell these as independent businesses or just sell the properties separately. I generally reinvest the proceeds from these businesses, but if I wanted to take some out for living expenses, I'd probably just structure it as a salary or bonus taken from these entities and passed onto me (I have a 'day job', so I don't depend on this money for my living expenses). Don't be impressed, it isn't that much anyway.
This is just an example. The idea here is that I want my personal finances separate from these businesses. I may want one of them to borrow money or have some other need where it would be useful to have them appear independent, self-sustaining business entities. I'm sure you could see an array of ways to structure this for your own needs and goals.
Overall, I'm a big believer in good financial and recordkeeping hygiene. Keep things separate and the transfers to your personal finances transparent and trackable.
What is the purpose of your LLC? Does it own the property? Is the property financed thru it?
I would . you want the money trail to show you got the rents . The irs may want to see that and the bank will surely want this done right when you do a refinance to prove your getting income and can manage your accounts correctly
I had insurance agent make the point that if you ever get sued and everything is not separated they can say that you were not acting as a separate entity, and they are more likely to be able to sue you for your personal assets.