I have created a LLC for holding a piece of rental real estate in Florida. I want to make sure I take the proper steps to keep my LLC as a separate entity then myself, what should I do other then the steps I have listed below?
Also- I purchased the property in the name of my LLC, but used my personal bank account to physically wire money to the title company. Is this ok? How should I record this transaction?
Things I think I should do:
1) Conduct regular meetings and record minutes
2) Use a Florida registered agent
3) Keep a separate bank account for the LLC and only use it for business expenses
4) Hold a operating agreement
5) Do I need to use "Quickbooks" or other professional accounting software to record expenses/revenues?
Limited Liability Company (LLC) Lawyer
LLCs have come on quickly to be the leading choice for small business throughout the courtry. LLC acts generally have been drafted in response to what the business community was seeking: Less legal mumbo jumbo, just a business entity with minimal formalities.
One your list, No. 1 conduct regular meetings and record minutes - no one would find fault with this, but it is really unnecessary for an LLC (its a very good idea for a corporation, however).
Upi do need a Florida registered agent, it is a very good idea to have a written operating agreement.
You are certainly not mandated to use any particular accounting software, or any software at all if you like "old fashioned" double entry book keeping with ledgers and journals, etc.
Keeping separate bank account for the LLC, used only for business purposes is the most important item on your list. You certainly increase the possibility of veil piercing if you commingle person and business funds.
You haven't mentioned whether you LLC is a single member or multiple member LLC. In many states, and particularly in Florida, this can make a difference. The Florida LLC act was recently amended to recognize a distinction between single member and all other LLCs. Have a "real" multi member LLC (not one made up of you and your living trust, etc.) may make a difference. Consult a Florida attorney and get this explained, along with the answer to your whole question.
As far as using personal money to fund the real estate purchase, these funds could represent you initial investment in the company and recorded as such.
Remember things you do yourself are going to carry with them the potential for personal liability. So if you perform repairs which turn out to be defective, you will have personal liability (whereas if you hired a contractor you would not). Also personally guaranteeing debt is obviously an opening to personal liability.
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Real Estate Attorney
In your posting you do not indicate the state in which the LLC is organized nor do you indicate whether you are the sole owner of the LLC. That information is important in assessing the potential problems you may encounter. All of the things you mentioned in your posting are good ideas. However, one of the most important things you can do is to check the IRS box to have your LLC taxed as a partnership rather than a corporation. You should NEVER own real estate in an entity that is considered a corporation for federal income tax purposes. To get complete answers to your questions, you should contact an experienced real estate lawyer in your area.
Disclaimer: This answer is provided for informational purposes only, does not constitute legal advice, and does not create an attorney-client relationship. Actual legal advice can only be provided after completing a comprehensive consultation in which all of the relevant facts are discussed and reviewed.
Estate Planning Attorney
The other attorneys have provided good answers. I would like to emphasize that a single member LLC in Florida will not provide the personal protection you are seeking. You need to have at least two members to protect your personal assets. You also need to keep all personal and business accounts separate. Using a personal bank account gives the impression to the court that you are not operating as a business but rather as an individual.
I would encourage you to contact a business attorney to assist in your venture and help ensure you have the personal asset protection you are seeking.
This answer is provided for informational purposes only, does not constitute legal advice, and does not create an attorney-client relationship. Florida Attorney practicing in areas of Estate Planning, Elder Law, Trusts, Probate, Guardianship, and Business Law. www.ferraezlucas.com The information provided is for educational purposes and not intended to provide legal advice or to create an attorney client relationship. Please contact me at firstname.lastname@example.org or call my office should you like to discuss your Florida legal matter further. Actual legal advice can only be provided after completing a comprehensive consultation in which all of the relevant facts are discussed and reviewed.