The real estate market is a fickle one. You never know what’s around the corner, so it’s imperative you take steps to protect your interests with each decision you make. One thing that you might need to do is to put up a barrier between your real estate investments and your personal assets.
Establishing your company as a limited liability company, or LLC, is one option that you have for doing this. Once the company is an LLC, financial issues that arise for the business, including any court judgments, fall solely on the company. You won’t have to worry about a creditor for the business coming to seize your personal assets.
In Pennsylvania, you can set up your company as an LLC by filing paperwork with the Bureau of Corporations and Charitable Organizations. You need a Certificate of Organization and a docketing statement. As you’re filling these out, it’s a good idea to work with someone who is familiar with the process because there may be tax implications for the filing.
As far as taxes go, the LLC enables you to route the profits and losses of the company through your own personal income taxes. This might make it a bit easier for you during tax time. Many individuals find that this is a preferential option since the personal taxes might be less than what’s required for businesses filing taxes.
You may also have other options for your real estate company, so it’s important for you to evaluate them all. You need to do what’s best for your company while still protecting your personal assets.