Financial Advantages of LLC for Landlords- By: Roby Hicks
Rental properties are among the most popular businesses in the real estate industry. This is because of the growing number of tenants today. This can be associated to the increasing numbers of foreclosure. Although it is ideal to make the said investment, it is not easy. This is because of the many lawsuits that the landlord can face. Once this happens and the complainant is successful, the landlord will be required to make payments, which can be very expensive.
It is a good thing that you can file your business under the LLC structure. This offers several financial benefits. LLC or the Limited Liability Company offers protection to the personal properties of the business owners. This is because under this structure, the business has a separate identity. This means that its debt is not the debt of its owners just like how a corporation works. If the landlord has to make some settlements, he will only need to use the business assets and not his own. This gives the owners the much needed peace of mind when running the business.
They need to protect their assets because landlord lawsuits are no joke. It can be very expensive. Once the landlord loses, the payment he has to make may exceed what his insurance covers. And if his personal property is not protected, he could lose them all.
One can enjoy other benefits under this business structure. This includes the easier way to manage the business. Unlike a corporation, there is no need to have a board or a board meeting to make decisions. The structure can have the flexibility of other business types like the sole proprietorship and the partnership. This is similar with the type of tax payment the business adapts. If there is only one owner, the sole proprietorship arrangement shall be followed. If there are two or more, it could adapt the partnership or corporation arrangement. There are slight differences on how each arrangement is filed. However, most of the manner and considerations made are similar. Some of the considerations are the operating expenses.
As mentioned earlier, expenses related to the operation of the business can occur. Keep a record of these expenses. Do this because these are deductible from the taxable amount. Some of the operating expenses include the cost for advertising and looking for renters. This also includes maintenance cost as well as the cost of repairs. In order to be certain that you have accounted all the deductibles, consult an LLC lawyer.
You do not have to worry about qualifying for it as well. You do not need to have a partner for this. You may be a sole owner or you may be a group of people running the business. You can reformat your business as an LLC as long as you comply with all the requirements including all the permits. You should also pay all the fees and charges. Additionally, do not forget the Articles of Organizations.
The LLC is important for all the landlords. This assures them that their personal property is protected and that it will stay intact no matter what happens to the business.
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