Business Planning FAQs
Should I Form an LLC for my Rental Properties?
Many investors took advantage of the historically low-interest rates in the past few years by investing in residential rental properties.
However, it’s common for individuals to overlook the important step of protecting themselves from liability they have exposed themselves to via the rental properties by putting those properties into an LLC for liability protection.
If the properties are held in your individual name, you are exposing yourself to the legal liability of your tenant or their guests on the premises of your property.
It’s a good idea to seek advice to not only form an LLC but also ensure the proper steps have been taken to fully protect yourself from personal liability on each property.
Can I Avoid Going into Business with my Partner’s Family?
If you have a business with one or more business partners, it’s critical to implement a proper Buy-Sell Agreement that contemplates what occurs upon your death, your partner’s death, or other life events such as disability, divorce, or retirement.
By drafting a proper Buy-Sell Agreement, the terms of your buyout are pre-negotiated to avoid any arguments regarding the value of your shares and who receives the shares of your business upon your death – thereby avoiding an event that could prove detrimental to the business by including individuals whom you did not intend to be in business with.
I Want to Start a Business. How Do I Do That?
Depending on the location and type of business, getting a new small business properly registered, named, licensed and insured can be a daunting process.
The Firm’s Business Law practice assists clients in a broad range of organizational, business, financial and operational matters. In crafting workable, creative solutions to our clients’ concerns, Evans & Davis attorneys apply not only legal expertise, but also business acumen developed through years of experience.
What is a Business Succession Plan and Why Do I Need It?
Business succession involves creating a plan for someone to either own or run your business after you retire, become disabled, or pass away. Succession plans are integral for keeping your company afloat when an owner or key employee leaves the company or passes away.
All business entities, regardless of size, need a succession plan. We often see business owners who fail to plan find that the ownership in their business pass unintentionally into the hands of people who do not share the same passion, or lack the experience or skill to properly run the business.
If I Have More Than One Rental Property, Can I Use the Same LLC for All the Properties?
If you have more than one rental property, you should not put them together in the same LLC.
Property A and Property B should each be in their own LLCs. The reason for this is that if the renter in Property A gets hurt and sues you, they can collect property A and property B in the lawsuit if they are both in the same LLC. The idea is that if they are each in individual LLCs, the renter in Property A can only collect Property A in a lawsuit against you.
Do I Have to Have Separate LLCs for All of My Rental Properties?
Some states recognize something called “Series LLCs.” This is a structure where you would have one LLC, for example, “Davis Investments, LLC,” and you would create subsections of that LLC.
In my example, Davis Investments, LLC, would have a Series A and a Series B. Each of your properties would be titled in a separate series. This has the same effect as isolating each property in a separate LLC, without the extra fees to the state every year of actually owning separate LLCs.
How Long Does it Take to Form an LLC and Put My Property Inside of It?
It depends on the state. Each state has different processing and approval times.
Usually, it takes about two to three weeks for the state to approve your LLC name and filing and then another two weeks for the county to file and return the deed transferring title to your property into your LLC.
Altogether, about five weeks on average.