Why You Need an LLC for Your Fix-and-Flip Business

With the right skill set and business sense, real estate investing can be a lucrative venture. But if you want to successfully build a fix-and-flip business, you should form a limited liability corporation (LLC). Choosing to start this type of business without the protections of an LLC could be risky. Here are some of the benefits that you can experience if you choose to form an LLC.

Personal Asset Protection

Just like with any other business, when you’re flipping houses, there’s always the possibility that things could go wrong and you could get sued. If your business isn’t an LLC, your personal assets may be on the line. They are lumped into the same category as your business assets. That means your home, vehicle, and even your personal savings could all be at risk.

When you have an LLC, your personal and business assets are separated. You can still be sued, but creditors will only be able to go after your LLC’s assets. Your home, vehicle, and bank account will be safe.

Shield Against Personal Debts and Liabilities

The limited liability that an LLC can provide you also extends to debts. If your fix-and-flip business goes into debt, only your LLC’s assets can be used to cover those debts, leaving your personal assets secure. If your LLC has multiple members (owners), this protection will also apply to their personal assets. Although the line between your work and personal life can get blurry when you own your own business, having an LLC will mean that line is never blurred when it comes to your assets.

Perpetual Existence

If you’ve worked hard for your real estate investing success, you probably want your family to reap those benefits once you’re gone. But this can be tricky with some business entities. With an LLC, it’s easy! Unless specified differently in your LLC’s articles of organization, the LLC will continue to exist even in your absence. You can pass the business onto family after you’ve passed away.

Your fix-and-flip business can easily change ownership many times in its lifetime without it affecting the LLC. This is also an important benefit if you decide you want to sell off your shares in the business.

Tax Flexibility

One of the major headaches of owning any kind of business is paying taxes. If you form an LLC for your business, you’ll have a bit more flexibility. You can choose to be taxed as a partnership or S-corporation. This flexibility allows you to do what’s best for your unique situation. In addition, LLCs cannot be double-taxed, which is possible with corporations.

Start Your Fix-and-Flip LLC Using Enterprise Esquire’s Business Formation Services.

You don’t want to wait to form an LLC. Any time you are spending flipping houses without being under the protection of LLC, you are putting your personal assets on the line.

Even if you know it’s important, the idea of forming an LLC can be daunting. Let Alexis Hart McDowell of the Enterprise Esquire make it easier! Our knowledge and experience can be an invaluable resource to you while navigating the process of building a business. Contact us today to get started!