Incorporating Real Estate

Why You Should Incorporate Real Estate Business

Many people have little real estate investment properties and they may wonder if they should merge . There are many facets to the discussion , which may depend on your goals and objectives to become a real estate investor . Even if you are not a big business these questions can help you with your finances . There are many ways you can benefit from incorporating your real estate investment .

It may be best to incorporate to protect your business assets from your personal assets . When you have everything in your name , you can take on more responsibility if you receive a claim from the tenant . It can not only remove the assets of your business , but it can also affect your personal assets .

Insert can also be useful when it comes to taxes . Having a company can help you convert nondeductible expenses into deductible expenses . For example , if you have a home office that you want on your expenses , it would be difficult to claim them on your personal taxes . However , if the company you rent the same space of your home , you have an easier chance of claiming expenses . Also by entering you reduce the risk of being audited by the IRS .

Being a company can help your business and personal life separate , too . If you do not want to put your personal information to your tenants , into a company can provide a sense of anonymity . It can also make the interaction more professional , than you look just as owner . You are now seen as part of a management company and can make it easier to negotiate .

If you have decided to incorporate , another question that may arise is that the entity or structure that is best for you . There are three main structures : the company , Limited Partnership ( LP ) , and Limited Liability Company ( LLC ) . They each have different benefits and negatives . A company is a traditional business structure . It gives you a real estate investment separation of some of your personal assets , but also have the most maintenance because it requires the board of directors , annual meeting minutes , issue shares , and the annual shareholder meeting minutes . An LP is relatively simple but the main drawback is liability . It requires at least one general partner who will have unlimited liability . If you are a relatively small investor , you will probably be a general partner and you will not have limited liability as you want . LLC is also relatively simple and as first recommended that you use when you start out . It is recommended for you with no obligations you could lose more than you put in and the maintenance is very flexible .

The problem combining the real estate business can be complicated . It is recommended that before you start the process you use to enter or consult with an attorney to see check out what will be best for you and also informed about the laws of your state .