Hey everybody, Grant Kemp from CreativeCashFlow.com here. Today, I’m diving into the essentials of creating your LLC. While the real estate itself is crucial, so is structuring your business to protect your assets. Let’s dig into some key steps to get your LLC up and running properly.
Importance of Using an LLC
Never Do Transactions Outside of an LLC
Operating outside of an LLC exposes you to unnecessary risks. Never engage in a transaction with a consumer without the protection of an LLC. The only exception might be partnering with another investor who runs the deal through their LLC. Even then, it’s safer if the transaction isn’t directly in your personal name.
Asset Protection
Operating under an LLC shields your personal assets. It creates a legal barrier between your business activities and personal finances, offering peace of mind.
Clear Financial Separation
An LLC also helps maintain clear boundaries between your personal and business finances, which is essential for legal and financial health.
Choosing an LLC Name
Selecting an Easy-to-Spell Name
Your LLC name should be simple and easy to understand over the phone. Avoid overly creative names that require you to spell them out frequently. For example, my first LLC was named “Grandin Properties” after combining my name with my wife’s name. It sounded cute but was impractical due to the constant need to spell it out.
Checking Domain Availability
Make sure the .com version of your desired name is available. Use reliable hosting services like Hostgator, and avoid GoDaddy for its stance against net neutrality. Hostgator offers excellent support and is generally more consumer-friendly.
Verifying with State Controller
Before finalizing your name, verify its availability on your state controller’s website. Sometimes, names that are too similar to existing LLCs will be rejected. You might need to mix and match words until you find a unique name.
Crafting a Strong Name
Start by listing words that represent your business values. For example, if you want your company to convey strength, you might list words like “oak” or “pride.” Use a thesaurus to find synonyms and create combinations. Once you have a shortlist, verify availability and choose the most fitting name.
Filing the LLC
Hire an Attorney
You can file an LLC on your own, but it’s better to use an attorney. Proper LLC creation involves more than just filling out forms. To get the liability protection you need, an attorney ensures all paperwork, including bylaws and annual filings, is in order.
Obtain an EIN
Your LLC needs an Employer Identification Number (EIN), which acts like a Social Security Number for your business. It’s required for most business activities, including opening a bank account. Visit the IRS website to get your EIN for free.
Opening a Business Bank Account
Opt for local community banks rather than large national banks like Bank of America or Chase. Community banks provide better customer service and are more willing to help with loans and other financial services. In Dallas, Texas Brand Bank and Texas Republic Bank are two excellent options.
Avoid Commingling Funds
Never mix personal and business expenses. Using your business account for personal purchases can jeopardize the protection your LLC offers. If a lawsuit arises and commingling is discovered, your personal assets could be at risk.
Additional Business Needs
Logo Design
While not essential to start, a good logo enhances your brand. Shaun McCoy is a talented designer who can create logos for under $100. Contact him at [email protected] and mention my name for a great deal.
Website and Email Setup
Website templates from companies like OnCarrot make it easy to set up a professional site quickly. However, keep an eye out for new templates from Propelio, which promise to offer even better functionality. Future videos will walk you through setting up email accounts and integrating them with various devices.
Contracts
Importance of Proper Contracts
Contracts are non-negotiable. They ensure clarity and legality in your transactions. Focus on having solid, legally binding contracts from the start to avoid future disputes.
Getting Started
Focus on Action Over Perfection
Getting bogged down in details like having the perfect logo or website can delay your progress. Once your LLC is set up, dive into marketing and finding deals. The most critical step is to start doing business and making transactions. Everything else can evolve as you go.
Final Thoughts
Creating an LLC for your real estate business is a crucial step in protecting your assets and ensuring clear financial boundaries. By choosing a simple, memorable name and verifying its availability, you set a solid foundation. Hiring an attorney, obtaining an EIN, and opening a dedicated business bank account further safeguard your operations. Remember, while details like logos and websites enhance your brand, the priority is to start making transactions and growing your business. Focus on action and let the finer points develop over time. With these steps, you’ll be well on your way to building a secure and successful real estate venture.
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