OfflineIf possible I do not want to start up a new company or LLC until I do my first deal and than have the money to startup a new company. In order to do it right it looks like I need around $700 to start a business with all of the incidentals that I would need and like to have. That said can experienced REI's cut to the chase and tell me can I get away with doing my first deal using just my name and not a company name or must I incorporate first?
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I would recommend you do a deal or two before you form your LLC. Unless you have the spare cash laying around and it makes no difference. Then go ahead and set up your business entity in advance. You don't have to have one in order to do a couple of deals first however.
Michael
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Before you set up an LLC. Research the best option for you. You may not even need one and you don't need $700 to start one. You can do it yourself and the cost depends on the state. If my memory is right, seems it was about $80 in California and you can find the information on each states website. The trick is to carry out the rules of the LLC. You have to follow certain guidelines like having regular meetings, keeping minutes, etc. If you don't, then your LLC isn't worth the paper it is printed on and a judge can throw it out in the case of a lawsuit if you don't follow the rules. There are also many companies that will help you with the paperwork if you need it. But honestly, the state website has everything you need.
I'm not even sure having an LLC is necessary. My accountant told me to just carry a lot of insurance. I have a million dollar umbrella. Much easier than having an LLC for each property ($800 minimum taxes per LLC each year in CA). I suggest you talk to a real estate attorney and get their opinion. But also hear what benefit other's on this site or in your REI club have gotten by having an LLC.
Not good if you buy and sell the properties quickly. Better for buy and holds.
"Faith is taking the first step even when you can't see the whole staircase."
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I agree with Ralph as you can do your 1st deal or 2 before you form an LLC. However, I would talk to an attorney as to which kind of business entity you want to set up. In the original post you mention you want to set up an LLC and that it cost $700. You must understand that there are different types of business entities and that they offer different types of protection. An LLC is one type of corporation.A full Corporation, which is commonly associated with incorporation, commonly called a C corp is another. LLC stands for limited liability corporation. It limits your liability. Really in my opinion. Like I said, check with an attorney. I don't believe you'll be needing an LLC at all unless you plan on renting. Because renting can expose you to liability. Another words, a situation in which you can get sued. And from my experience in LLC set up is about $150. Anyone tells you different get a 2nd opinion.
Basically you want to set up the correct entity at the right time in the proper place. Different entities have different purposes. Not only do you need to be concerned about liability, but there will come a time when you need to be concerned about taxes and estate planning. Are you wholesaling or rehabbing? Are you dealing with ordinary income or passive income? Sole proprietorship or general partnership (married, single, or family)? Single member LLC, managed member LLC, series LLC, holding LLC or operational LLC? After you do your first deal, you need to lay out a business plan and sit down with a CPA/Attorney so you can...set up the correct entity at the right time in the proper place.