Last week, we established the importance of getting an LLC to keep your business separate from your personal assets.
There are a few steps to get this done, but fortunately they’re pretty easy.
To start your business, you’ll need a few things:
- Come up with a name
- Get your EIN
- Get a Business License
- Hire a local attorney to set up your LLC
- File any related taxes
1. The fun first step is you get to come up with your business name. Feel free to be as creative as you want!
2. Then you need to get an Employer Identification Number (EIN) for your business. This is essentially a Social Security Number for your business. It’s the number that identifies your business that you can put down instead of using your SSN. Gotta keep your business separate from your personal stuff, and this is one of the ways to do that. This is also really easy – go to this IRS website, and go through the application process. It takes less than 5 minutes, and it really self explanatory. At the end of it, you’ll get your new EIN!
3. Once you have a great business name and an EIN, go to your local courthouse to the Licensing department (right next to where you get or update your driver’s license) and ask to get a business license. They’ll want to know what your business is for (owning and managing rental property) and what the name is, as well as your EIN. There will be a small fee for filing, but you’ll walk out with a business license in hand.
4. Now you can head over to the title company to start the LLC! As I mentioned last week, it really is important to have a professional do this for you, at least the first time. If you want to review it, check out last week’s blog post again.
5. Once it’s set up, let your tax accountant know you set up a business – there are usually taxes involved, and he can help you take care of that. Again, it’s best to let the professional handle it!
1. Come up with a great business name.
2. Get your EIN (link is above or Google it).
3. Go to your local courthouse to the Licensing department and get a business license.
4. Ask your banker for a good recommendation for a title company.
5. Email the title company and ask them to set up an LLC for you to own rental properties. They’ll need your business name, EIN, your personal information (name, address, SSN, members [who owns the LLC – you, or you and any partners], etc)
6. Contact your tax accountant and let them know you started a small business. You’ll have to file the BPT-IN form and pay the related tax (for me it was around $100). You tax guy can handle most that for you though.
You’ll now be the proud new owner of a small business!
Try to file as a 2-member LLC (you and a spouse is a good choice), as the IRS tends to audit those way less than single member LLCs.
Disclaimer. Yep, another one. I’m no lawyer, this is just what I’ve discovered through working through it all! The size of your potato harvest may vary.