Using a Business Name without Filing a Formal Business
I will be purchasing my first property in the next month or two so I want to set up business accounts with my bank to keep all of my REI money separate from personal money. I've read all the arguments for and against forming an LLC this early and I don't think it's really necessary for me, but I'd still like to open accounts using a business name rather than my personal name.
Is there a way I can open accounts under a business name, use a business name on business cards, etc. without filing a formal business? It seems like using an umbrella liability policy will be sufficient for me until I have accumulated several properties. At this point, I will probably open an LLC. Until then I'd like to use a business name until I can formally file for an LLC, then use the same business name for my LLC.
Most Popular Reply
Hi. I've posted numerous times about LLCs on here (I'm sure you can probably search them). I've never understood people's anxiety or consternation over them. Some people seem to have a huge bug up their crawl about not using them with no legitimate reason. Start it now. If you're serious about investing, take your business seriously. If you're owning a rental property there is substantial protection (despite what the naysayers say). Yes, you'll have to get a loan in your personal name and then transfer to the LLC. No, that's not a pain. It's done with one document that can be signed at closing and pretty much SOP. Just tell your title co/closing attorney that's what you're doing. Yes, there's due on sale clause. I've posted a ton about this, too. It also seems to spark a nasty debate, again usually without legitimate reasons.
But for what you are looking to do, you will need a formal entity established with an EIN. Otherwise everything is still attached to your SSN. If you want to do it yourself, that's fine but all you are getting is a name for the bank account. You're not getting any protection. You'll need a lawyer to draft the operating agreement.
My recommendation is talk to a good asset protection, real estate investing attorney and sophisticated investors to understand what you are doing and the risks and the protections--part of just being educated. Keep this forum for what it is, just an opinion forum. If you want some freebies, I've got a ton of education on my website.
happy investing.
Jeff