I am trying to get started on real estate investing out of the Chicago area. I have be under the impression that using your home address to start a business entity is not the greatest idea. I've read in multiple articles that a better inexpensive solution would be to use a virtual address. I was looking into going that route because I want to utilize the entity credit rather than my own as much as possible. The problem that I'm having is that I don't know if any are actually reliable. The one I see in most articles is Regus but upon looking at comments it seems like a terrible route to go, mainly do to customer service and extra charges. I also seen that many people using the V.A services had a problem with setting up a bank account because the bank was able to recognize that they were using a V.A. I seen 2 other companies on the list Alliance and Davinci but I could not find any other information about them outside of what they had on the website. If anyone has some solid advice on the V.A.s or any solution to avoid using your home address for you llc to get the most out of building business credit it would be greatly appreciated. Thanks in advance.
Good morning @Andre Deville ! We use our attorney's address as the registered agent's address when we set up our LLC.
Hey @Patrice Boenzi I currently don't have a attorney yet. I just wanted to form a company to start the process of building business credit and work my way up.
@Andre Deville so how do you start a company and build business credit without going through the steps. I am interested to learn what you are doing since, in my mind, it seems backwards...but that is just my mind. That is why I love BP so many learning happens.
@Patrice Boenzi From my understanding you can easily form companies yourself use net 30s and cards to establish some type of credit to utilize for different transactions. I have seen it done on multiple occasions mostly using the home address. I have read that you cant take advantage of all the potential bank funding because the business wont look as established as if you had a actual office location.
@Andre Deville very interesting. When I set up my business accounts at the bank, I needed to bring in all my corporation papers etc. I am establishing credit through my business accounts. So, interesting fact.. my attorney does workshops and educates business owners about the difference between LLC/Corporations/Sole Proprietor and she was saying that when you set up a company you need enough capital to start and you need to maintain capital or that it can appear that it is a "skeleton" account and not a real business account. Also, interesting we are setting up our LLC through Delaware.
@Patrice Boenzi Is the Delaware account for amenity? I definitely understand what the attorney was explaining but it just depends on what you plan on using your entity for. I want to establish credit strictly through the business account also so I don't have to pg anything.I plan on having all the corporation papers in line which you can do yourself.
@Andre Deville No, it would be to fall under their laws. I still do not understand how you will establish credit strictly through the business account because you still need money.
@Patrice Boenzi I would personally fund the accounts with enough capital to make minor transactions to cover the minor loans to establish tradelines. You are not doing any rental properties in the Delaware entity are you?
@Andre Deville our rentals are in Michigan our LLC is out of Delaware
@Patrice Boenzi you need to still file your LLC as a foreign entity doing business in IL. I'm going to send you and @Andre Deville a link to a book that I think will provide you each more information for your individual situations.
Andre, you definitely can use a virtual address and establish your LLC there. I'm a California investor with an Illinois LLC. With credit under it as well. The book link I'm going to send you will give you some better advice regarding trying to just build corp credit as a means to an end. Most people selling that idea are not lawyers nor even accountants. They usually are trying to sell a service, like helping you set up entities.
Patrice’s first advice is really recommended, getting an attorney to help you. There’s more to doing this than just filling paperwork. Avoid one who’s recommending Nevada or Delaware corps though.
Since you’re in IL, do it there. Read the book though. I don’t care if you buy it off the link, find it anywhere you want but you need to educate yourself more, for your own protection.
Oh also, Andre, I'll send you a name of a Chicago attorney who is very reasonable and very helpful for your LLC setup.
@Eric Harnden I totally agree and understand! We have two attorneys helping us as we have properties in several states.
@Andre Deville get a UPS Box for $200 a year or follow @Patrice Boenzi 's advice and use your attorney's address for your principal place of business. I allow my clients to use my address for a small fee each year (equal to the time cost associated with throwing away all of the junk mail I receive from Comcast, Amex/CapitalOne etc).
You don't want the public at large knowing where you live, even though it's pretty easy to figure out with a simple Google search. This is why you would be wise hire an Attorney to do your formation work, as opposed to LegalZoom or your accountant, as these tricks of the trade are not widely known or disseminated by the average person.
Whenever building a business, it is crucial to select the appropriate legal entity (whether it is a corporation, S corporation, partnership, sole proprietorship, limited liability company or limited partnership) and to properly protect your business and yourself. A lawyer will explain all the options and the benefits of each, from tax consequences to liability exposure. Another advantage of seeking legal advice is to have your lawyer participate as an ongoing business partner. They will be “on call” when your business may encounter a growing pain that calls for legal advice.
Typically in this area of law, attorney costs are kept to a minimum by offering client’s a flat fee engagement option. This includes incorporation of the business, and preparation of related business documents, such as Operating Agreements, Partnership Agreements, etc.
@Rene Doyle I like what this guy has to say about it. https://youtu.be/5ewX4yYUApE
@Eric Harnden thank you.
You can create an LLC with a PO Box in Georgia. Costs less than $100/yr.
A United States Post Office Box where you can receive snail mail is a good option for both privacy and tax deductions.
The cost of the PO Box is 100% tax deductible.
Once you get started you will want to write off mileage as well. We will not discuss having a Home Office in this discussion. Mileage from your home to first appointment may not be covered. However, if your first stop is the local PO Box most mileage incurred after that stop will be deductible. Now if your last stop is also the PO Box everything in between could be deductible.
Part II: Consider hiring a resident agent for your business. This can be an attorney, bank or personal friend. Most states require that a registered agent have a street address where all legal papers can be served. Keep the PO Box for everyday things and use the Registered agent ONLY for state required correspondence.
@Andre Deville - welcome to the Illinois Real Estate tribe! As @Patrice Boenzi mentioned, a real estate attorney is a good place to start. In Illinois, you are not required to have an attorney at closing as a matter of law, but frankly the process can be so complex and confusing it's definitely a good idea, especially for someone who is looking to expand. And yes, @Eric Harnden, fees in this space are very reasonable.