Navigating the Real Estate Landscape: How Professionals Help Clients Achieve Homeownership Goals with LLC Support

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For real estate agents to help clients achieve their dreams of homeownership, they need more than just knowledge of the local market. They also need a sturdy and supportive business structure of their own, allowing them to invest in their clients’ outcomes all while minimizing personal risk.

One way to achieve this type of supportive business structure is to register your real estate business as a Limited Liability Company, or LLC. Forming an LLC can ultimately benefit agent/broker and client alike. In this post, we’ll explore why.

What Are LLCs?

The LLC is one of the most popular small business structures in the country. The LLC was developed in the 1970s, and while it has become common across all industries and verticals, it was initially created with real estate companies in mind.

When you register an LLC, you are actually establishing a new legal entity. In other words, the business is its own thing, distinct from you and your business partners. As such, you can keep your personal finances separate from the business finances. At the same time, though, an LLC comes with much more minimal regulatory burdens than a Corporation. The combination of flexibility with personal protection is what makes it such a popular option among business owners in general, and real estate brokers in particular.

Why Form an LLC?

Registering your business as an LLC brings many advantages. Some of the primary benefits include:

  • Shielding your personal wealth. First and foremost, an LLC means that you can protect personal or family assets from potential litigation. Real estate can certainly be litigious, but an LLC allows you to keep your personal finances off the table.
  • Optimizing your tax efficiency. An LLC also makes it easy to declare business profits or losses on your personal tax return, then pay at your normal rate. Yet if you ever determine that corporate taxation would make more sense, you can opt into it.
  • Creating administrative ease. Establishing an LLC is pretty simple; we’ll get into that shortly. Additionally, you have the freedom to set up and manage your real estate company however you want, bringing in partners only if and when you see fit.
  • Shoring up credibility. One final note is that starting an LLC establishes your credibility, demonstrating that yours is a serious business. This can be invaluable for earning the trust of potential partners, clients, even lenders.

The bottom line: Registering as an LLC provides you with the flexibility and the personal protections required to invest fully in serving your clients. The LLC format can be a strong foundation for ongoing real estate success.

How to Register Your Real Estate Business as an LLC

As for the specifics of registering an LLC, the steps can look a little different from one state to the next. Here is an overview of what the process typically looks like.

Register in the Right State

Technically, you can register your LLC in any state, which prompts some business owners to seek out the state with the most advantageous LLC laws. To keep things simple, and to avoid the need to register in multiple states, it’s almost always best to register in whichever state you’re doing business. (Basically, register in whichever state or states you have an active real estate license.)

Choose a Registered Agent

Every LLC is required by law to have a Registered Agent. This can be anyone who is chosen to receive legal correspondence, including tax documents, on your behalf. While some states do allow you to serve as your own agent, it is usually easiest to just hire some. Note that the best LLC services are often under $100 annually.

File Your Paperwork

There are a couple of documents you’ll need to register your real estate LLC.

  • An Operating Agreement outlines the terms by which you’ll manage your business; basically, it summarizes the agreement you make with your partners, if any.
  • Your Articles of Organization is the document you file with the state, officially forming the LLC as its own legal entity.

Be aware that, when you file your Articles of Organization, you’ll also need to pay a registration fee, which is determined by your state. Expect to pay anywhere from a couple dozen to a couple hundred bucks, depending on where you are.

Set Up Your Finances

A couple of financial tasks to help you establish your LLC:

  • Claim an Employer Identification Number (EIN) from the IRS.
  • Make sure you have a bank account that’s for the business only, not attached to your personal checking or savings accounts.

Use Your LLC to Support Real Estate Success

The LLC format can be an invaluable foundation for a thriving real estate business, protecting your personal wealth and ensuring the flexibility you need to prioritize client outcomes. Consider starting your own real estate LLC today.

Author Bio

Amanda E. Clark  is a contributing writer to LLC University. She has appeared as a subject matter expert on panels focused on small business ownership as well as social media marketing.

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