Getting Your Real Estate Business Legal

The process of starting your real estate business is a bit overwhelming, and the biggest decision is how you choose to legalize your company. Choosing the right type of business entity for your brand is imperative for success. There are a few ways to decide what will works best for your company and how to go about the process. There are numerous benefits that your real estate company could experience as a result of incorporating.

By Nellie Akalp | January 14, 2014 |

For real estate investors who want to start a business, they’re adding more to their existing to-do lists. In addition to finding properties, working with realtors & sellers, and managing rehabs or closings you now have to register your business, choose a name, set up a site…the list goes on and on!I have made a career for myself out of helping entrepreneurs in their journey to starting a business. The biggest decision you’ll make in legalizing your business is choosing what type of business entity works best for your brand. Here’s an overview of your options:

  • Corporation (C Corp or S Corp): Protects your personal assets. Offers certain tax deductions and benefits. Acts as its own entity.
  • LLC: Also protects your personal assets. Has fewer hoops to jump through than a corporation. Doesn’t require you to file business taxes (just report the income on your personal tax forms).
  • Sole Proprietorship or Partnership: Your personal assets are liable, should you be sued, and can be taken from you. You file taxes as an individual.

Many business owners end up with the wrong business entity simply because they don’t know which one best suits their needs.

Why Incorporate?

If incorporating a business is the best strategy for you, there are many benefits you’ll reap from becoming a corporation:

1. Should you be sued, your personal assets (bank accounts, house, cars) cannot be touched.

2. You may be eligible for certain tax deductions that can lower the amount of tax you pay.

3. You create a sense of trust. Customers tend to trust “official” business entities!

4. Your business can outlive you. If you sell it, you simply sell the corporation and it carries on.

5. You can have shareholders and raise capital.

How to Incorporate

You’ve got a few options when it comes to incorporating your business. The first is to do it yourself. It requires a bit of legwork and patience, but is a perfectly reasonable option. Another option is to hire a lawyer. Many people feel comfortable having an expert advise them on this important decision, though in my opinion, most of the time a lawyer isn’t needed, and is an unnecessary expense. And finally, you can work with a business filing company like that has the experience to help you through the process.

If you file your own incorporation, please be sure to read the requirements from your state and turn in your Board minutes as required. You’ll need a Board of Directors to comply with government regulations for corporations.

Busting the “Where to Incorporate” Myth

Like many entrepreneurs, you’ve likely heard that it’s best to incorporate your business in a state like Delaware or Nevada. Not so. While these states have favorable tax benefits for corporations, you’ll still be subject to tax laws in your own state.

Filing in a state other than the one you operate out of will just cost you additional fees and paperwork. Stick to filing your corporation or other business structure in the state where you conduct business.

Glad to share this article that I wrote for, Strategies & Tactics for Women, about incorporating your real estate investing business

For more information about Front Street Commercial Real Estate Group, click here...

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Virginia MacKoul

Virginia is a graduate from the University of Florida's College of Design Construction and Planning with a degree in Sustainability and the Built Environment, and a minor in Urban Regional Planning. Virginia joined the Front Street team in 2011, as an intern. Upon graduation, Virginia joined the Front Street team full-time as the Director of Client Services. Ms. MacKoul’s addition furthers Front Street’s continued growth and expansion within Gainesville and other North Central Florida markets. She was promoted to Director of Marketing in 2014 and now manages the firm’s team of interns and oversees all marketing and branding activity. Virginia was born in Boston and moved to Lee County, Florida in 1997. Virginia graduated her high school's International Baccalaureate program and started at the University of Florida with a focus on Architecture. Virginia shares Front Street's passion of giving back to the community and those in need. Virginia's hobbies include photography, cooking, football, movies, music, and spending time with her dog, Brinkley.

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