Is an LLC needed for wholesaling?

Question

Is an LLC needed or desirable to conduct your wholesaling business? I could see giving a link to how to look us up on the Secretary of State's website to show legitimacy as one benefit. Another big one is protection of assets. I don't have much when it comes to "retire early" but more than enough to hurt if someone sued it all away. One drawback in California is the $800 per year franchise tax on LLCs.

Do you have LLCs for wholesaling? Why or why not?

Thanks in advance.

Do you have LLCs for wholesaling? Why or why not?

Thanks in advance.

Basit Siddiqi · Answer

@Jon CattersonLLC is normally used for liability protection - You should consult with an attorney to see if creating an LLC will protect your assets/interest.In my opinion - Wholesaling has less risk exposure compared to other real estate business(brokerage, contractor, flipper).When it comes to a business/mindset - you can get by with a DBA instead of going the full length of an LLC.Somethings to consider before creating the entity.Good luck!

Brandon Vukelich · Answer

If you are truly looking to be a reputable "business" by wholesaling properties, you should form an LLC. I wish all wholesalers would take it serious enough to operate as a legitimate business.  I used to have an LLC in CA and recall the min $800 tax plus $600 or so to renew, so about $1400+ min just to maintain it.  Yes, that is crazy expensive compared to WA and other states but that isn't much of a business expense when you consider the lack of other expenses needed to operate as a wholesaler.  Plus if you intend to have revenue, one would generally want to take advantage of business deductions.  I can't see operating just about any business these days as a sole propreitor.  Best wishes on your journey!

Amy Aziz · Answer

@Jon Catterson as a person who purchases off the market land deals, I rely heavily on my LLC and online presence to gain the seller trust plus the tax breaks are nice as well. :)

Is an LLC needed for wholesaling?

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