Thursday, May 13, 2010

Set Up Your Own LLC's

After paying $1,200 for the first LLC I paid a lawyer to set up I decided to research how to do it and the past 5 LLC's were done by me for a total of the $100 filing fee.

Here's how you do it yourself.
First things first, go to this page: Click Here
This will help you determine if the name is distinguishable form other LLC names or not. It has to be distinguishable in order to get it.

Then Click Here to get the form you need to fill out called Articles of Organization of a Domestic Limited Liability Company.

And Click Here to get the instruction manual for filling out this very simple form which now can be filled out online.

Send the form in with the $100 filing fee and usually within a month you will get back a certificate printed on a substandard hundred dollar piece of paper stating that you are officially ______ LLC. OR you can now fill it out online and pay online via credit or debit card and you will immediately get your certificate that you can print off.

Then the next thing you will need to do is to get an EIN or also called Tax Id number so you can set up a bank account. So Click Here to get your EIN. You will have to spend about 5 minutes filling out a form online and you will get one emailed to you immediately.

Now, One more thing you need. You will be asked for this from the bank when you get your commercial loans under your LLC. You need an Operating Agreement. You can either copy the one you have from your other LLC's or get one online. This is the key document that will be brought up upon any separation of partners, death of any partners, if you get a divorce in the future you will have to produce this, etc. It's important that you have a good operating agreement that will protect you, the LLC and your partners if one of the above things happen. This is where you prepare for when those things that you don't expect to happen, end up happening. Click Here for an operating agreement. I am not endorsing it. Just a source for one. Type in a Google search Virginia LLC Operating Agreement and you will see many. There are free ones all over the internet. But you will have to read many of them so you can identify what is a good one and what is crap.

After lots of talk to many lawyers and other investors online, I have found an ideal legal structure for the best possible protection of your assets. This is not legal advice and I am not a lawyer. Just my opinion from a number of people I have talked to. Talk to your lawyer about it before proceeding.

Level one - Each property you own should be in it's own trust.  (Update, I no longer agree with this)
Level two - Set up a property management company to manage all of your property that doesn't hold any assets that will be bankrupted only if necessary upon a failed lawsuit. Also set up a pension within a self directed Roth IRA so you can buy real estate within this IRA which can not be taken from a lawsuit. Some say set up an S-Corp here. Others say it doesn't justify to set up an S-Corp until you have a couple million in real estate because it doesn't justify the work you will have to do with an S-Corp. And I can tell you from personal experience, I have an S-Corp for other companies I own and it is a minor pain in the you know what. (S-Corps Get Audited By The IRS Often)
Level three - Your LLC's. Don't have too many properties per LLC because if they get to this level, a frivolous lawsuit can potentially spread throughout the entire LLC. Also make sure you have good insurance on your properties, nothing can beat that.
Level four - A personal umbrella policy. LLC's these days have many holes. If you think your personal assets are protected, think again. If you break the law the veil can easily be pierced. And you're probably thinking, I don't break the law so I'm not worried about it. We're talking things as simple as forgetting to give a lead disclosure booklet and form to a tenant and the tenants child was chewing the paint off the wall and got permanent brain damage from it. Giving that booklet and form to every tenant is the law and proof of not doing so makes you a criminal. All landlords should have a tenant initial right next to a statement in your lease showing that they received the booklet and form.

Yes, I agree with what you're thinking right now. We do live in a police state. Freedom has been slowly taken away from the American people over the past 80 years. But that's the way it is and without a large national movement to change things, you're going to just have to deal with it.


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