Updated over 3 years ago on . Most recent reply
LLC formation
Looking to form an LLC with a partner to begin our real estate investing business. Any comments on how much this costs to start/maintain, and where to go to get set up? There are obviously online sites that claim to be able to help set up an LLC, but any advice on the subject from the BP community would be greatly appreciated. Thanks.
Chris
Most Popular Reply
Your LLC should be established in the state where you will be doing business. The laws of that location will govern those transactions and the LLC, regardless of where it was first formed.
You'll want your entity(-ies) to be owned by other entities, NOT by human persons. This affords the best isolation and asset protections ("Control everything, own nothing"), but still requires full insurance for maximum protection.
One way of doing that is to have a revocable trust with you as the beneficiary. Form an S-Corp as an operating company owned by the trust. The Trust and the S-Corp then form a multi-member LLC "holding company" which is also part owner of the S-Corp. When you achieve income, you can then pay yourself from the S-Corp using the 1:2 salary / dividend split to minimize your self-employment tax liability while still showing an income to prospective lenders for personal credit.
Hope this helps ...
...and, for what it's worth, my investing group's tax and legal expert's law firm has an entire department with a sign on their wall which reads, "We Fix LegalZoom Entities".