Structuring Your Real Estate Business in a LLC
Creating a Limited Liability Company (LLC) is something that many real estate investors should seriously consider given all of its advantages. Many investors do not take the time to properly structure their business from the beginning and this can lead to problems down the road.
Here are five reasons why you should be structuring your real estate business in a LLC to take advantage of the many breaks and opportunities that it provides.
Cutting Expenses
By separating your private and business investments, you are not only better organizing each one, but are also reducing your bookkeeping requirements as well. Separating business expenses and personal expenses is a much easier task and you will not have to spend a ton of time deciphering what was business and what was personal. This means that you can focus more on your investing and less on the records and bookkeeping, especially when it comes to paying an accountant or a bookkeeper to keep everything straightened out for you.
Protecting Privacy
By creating an LLC, you are not broadcasting your own name to the world which can be an important consideration when it comes to investing. The wealthiest people in the world own very little in their names because they understand the power of asset protection. The goal is to own nothing and control everything. There are also places and circumstances where having your name in public can be detrimental to getting the best real estate deal.
Being a Business Owner
Arguably the biggest benefit to creating an LLC is that you have become a business owner. Here, you can build value in your business as well as invest on a regular basis. Potentially, you can build up millions of dollars in your business while enjoying all the benefits of being in real estate. There is power in successfully branding your business.
Tax Breaks
This may be the most popular reason in structuring your real estate business in a LLC. This will mean making more money by paying less in taxes. In fact, this may be the main reason why so many investors are turning to real estate so that they can lower their tax burden. By adding in an LLC, you have increased the number of tax breaks that you can take advantage of.
Long Term Advantages
By structuring your real estate business in a LLC, you are creating a vehicle for long term stability and success. This can come in handy if you are incapacitated for period of time, even after you are gone so that your family can take it over and enjoy the benefits.
The advantages gained from creating an LLC are simply too great to ignore when it comes to real estate investing. For those who are considering jumping into real estate, building an LLC should be one of your first moves so that you can reap all the benefits from the start and make it easier to keep your investments straight. Plus, the tax benefits combined with the ability to pass down the business to your children provides powerful reasons why structuring your real estate business in a LLC is so valuable.
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