First on the attorney issue. I believe each person needs to educate themselves to the point where they can tell if an attorney is good or not. Its not something that can be done by “gut feel” because there is more to it than character, there is expertise. I think before choosing a professional, you need to learn enough to tell the knowledgeable from the ignorant, the talented from the ordinary.
We had a corporation (different business) for many years. We have several LLCs now. The main differences I see at this time between them is that the separation for Corps are settled law and the similar cases for LLCs are still being heard. The big negative on Corps is the issue of double taxation. There are ways around it, but bottom line is the money you retain year over year gets taxed once as Corp income and once as personal income. Our tax professionals had us pay out the accounts each year as a bonus. But the funds we had to retain for the next period expenses got hit for taxes.
We live in Florida and we are expanding our real estate investments. We plan to buy more homes and either rent them or flip. So far we have done this under our personal names as independent real estate investors, not under a company name. My question is, since we are expanding, what are the advantages of creating a company name compared to buying under our personal names as independent real esate investors? For instance, when you create a company name and put the name on a business card, do you have to get a business license before you can advertise as a company? Any information will be helpful. Thank you!
You do NOT need a business license to put your business name on a business card. Who’s going to check, or even care? Unless you have a unique name that you want to prevent others from using, I would not register the name or get a license. The fee you pay to the city or county is a waste of money, IMHO.
Business licensing requirements are based on what the businesses are. Generally, if you manage your own properties you do not require licensing, the way a Property Management company would since they manage other people.s properties. Similarly, for sale by owner does not require a RE license, but selling someone else’s property does. This is not true in all states, but in the ones I do business (AZ, CA, CO, TX) its true.
This is a late follow up but there are several advantages to forming a company. You will be able to avoid huge tax hits and will protect yourself from personal bankruptcy should bad luck occur. There are pros and cons as everything has. Personal research and a good real estate attorney will make your decision easy.