New Landlord: Do I need a business name, LLC?

Question

I'm a newbie. Became an accidental landlord and trying to get everything figured out to avoid any mistakes. I have a lot of questions and look forward to others' opinions.

The house is ready, and I'm in the process of drawing up a lease, but aside from setting up a business account at the bank, do I need to have an official business name? Can I just make something up or do I have to register it or have an LLC? I only have the one rental house.

Ned Carey · Answer

No you do not need a business name or LLC. Can you benefit from them? Perhaps. The only thing a business name would do is perhaps hide the fact you are the landlord. Not very effective and probably a waste of time. To use a business name all you have to do is register a DBA (doing business as)

Many people own businesses as a Sole Proprietor, legally you and your business are the same.

You can create an LLC or other entity to hold the property. This would mean transferring the property to the new entity. The new entity is legally separate from you. If set up properly it may protect you from some liability.

Many people think you need to have a "business" to deduct business expenses. This is not true. A sole proprietor can deduct legitimate business expenses even if they run a company in their own name.

Whether to create a separate entity is a complex question. There are many threads here on the subject. I also recommend the NOLO Press website and their self help legal book to educate yourself on LLCs, corporations etc.  Please note I am not recommending you do your own legal work but you should educate yourself so you can better work with legal and accounting professionals.

Good luck - Ned

PS Welcome to Bigger Pockets

Account Closed · Answer

Fred,
	
	If the property is finance, and you do a quick claim to an LLC you are still personal responsible for the loan. It is a good way to protect yourself but a little digging someone can find out it was in your personal name to start with.
	
	Joe Gore
	
	Dallas, Texas

Mark Caramanna · Answer

Hey Fred,

It depends what you are thinking of doing long term in Real Estate.

You can make the lease between yourself and the tenant. It seems if you are going through the process of setting up accounts you are serious about what your are doing. You can a DBA for your company and then open up an LLC. I highly advise you do not keep the property in you name personally and set up an LLC in which you can quick claim the property to. Trust me it makes sense to do things right at the beginning and save yourself the hassle later in the game.

Good Luck!

New Landlord: Do I need a business name, LLC?

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