Hello. I have a question that maybed someone here can help me with. I have a potenetial partner that is interested in establishing a LLC to do some RE investing (purchasing, selling, holding, etc.).
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How would we go about setting this up?
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When we see profits, how do we each receive our share?
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How do we file taxes on our earnings?
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Do we purchase the properties in the LLC name?
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What are the advantages and disadvantages of doing business this way compared to doing it in personal names?
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Any other advice anyone can give me would be greatly apprieciated.
I will try to help some. I am not a CPA or Lawyer.
How would we go about setting this up?
Can be done online in some states. The Sec of State here in Texas has a web site where you can register a new LLC for $200.
When we see profits, how do we each receive our share?
One a checking account and have the checks made out to the LLC that you collect. Then write yourselves a check as distribution shares or salary or return of capital each of you invested.
How do we file taxes on our earnings
The LLC files a return. I am unclear how this works with your personal return. I believe you pass the earnings thru to your personal returns similar as a partnership?
Do we purchase the properties in the LLC name?
Yes
What are the advantages and disadvantages of doing business this way compared to doing it in personal names?
Liability limits are the main reason.
Hopefully you will get some more input from other members who know more than I do. I use actually use some help here myself. LOL
If you’re financing, I would do it both of our names, or one if credit is much better (not the LLC). It will be cheaper and less of a hassle.
Afer you close on the loan, then you can put it in the name of the LLC, or into a land trust with the LLC as beneficiary, thus limiting your personal liability (if someone sues the property owner because of an accident or whatever, they might get your LLC’s $, but not your personal $ – IF you do everything right).
… At least that’s what my lawyer (who specializes in REI) says. Get some advice here and also find a RE lawyer and CPA to get down to the details about your specific situation.