Plainfield Rental Property LLC Attorney 

 Posted on January 09, 2023 in Real Estate

Lawyer in Plainfield and surrounding areas to help rental property owners with setting up limited liability companies

Setting up a limited liability company is a vital asset protection tool for rental property owners in Plainfield and the surrounding areas. An LLC is a powerful tool, which supplies limited liability protection for rental property investors. As a rental property investor, the LLC is the most popular business entity. An LLC has four major elements:

• Limited Liability Protection: A main benefit of an LLC is limited liability protection. Limited liability protection means that the owners (or members) of the LLC are generally at risk if the LLC is sued or incurs debts.

• Ease of Ownership: Creating an LLC is easy to set up and run because LLCs have fewer flexibilities in comparison to corporations. LLCs do not have to host annual meetings or keep formal minutes of minutes. Transferring ownership of an LLC is simple to do because transferring ownership of an LLC by transferring ownership of the LLC to another member (or owner).

• Easy Tax Compliance: LLCs are typically taxed as sole proprietorships for single-member LLCs. A single-member LLC is an LLC owned by an individual or one business entity. LLC owners report their share of profits and losses on a schedule c of their tax return.

• Flexible Management Structure: The management structure of an LLC is generally managed by managers, which are appointed by the owners or otherwise known as "members". Management-managed LLCs are the most common type of LLC in Illinois.

An LLC is an excellent choice of business structure for rental property owners. At Gateville Law Firm, we are Plainfield Rental Property LLC Attorneys. As rental property owners, landlords and investors involve tenants, which may include porch collapse lawsuits, mold issues, and eviction lawsuits, among others. The rental property business is a risky business venture. As a risky business venture, rental property owners need a solid business structure, which supplies them with liability protection and security.

One of the first steps in creating an LLC is picking a corporate name. LLCs are organized in Illinois through the Illinois Secretary of State. The rental property owners must set up a unique name, which is distinguishable from other registered businesses. A Joliet rental property LLC Lawyer can aid you to set up an LLC and structure your rental property holdings in a manner that maximizes your profits and limits your liability concerns.

Plainfield Series LLC Attorney Serving Shorewood, Joliet, Plainfield, and surrounding areas

A Series LLC is a hyper version of the limited liability company. The Series LLC allows a rental property owner to create “mini” LLCs for each rental property. The Series LLC essentially acts as a holding company, which owns “mini” or “series” LLCs, which segregates one’s liability for each rental property. Generally, rental property owners group their rental property business as a whole, which exposes the multiple properties and increases their financial vulnerabilities. By titling one's rental property under their name or couple's name, one lawsuit or judgment can affect all the rental property owned by an individual or couple. Setting up an LLC is a useful strategy to shelter one's risks and limit the problems of one rental property to that specific property.

The Series LLC is used to own multiple rental properties as a separate unit under a parent LLC. This strategy achieves business protection by reducing one’s liability concerns by segregating property ownership into separate LLCs. It is highly recommended that each series LLC have its' own federal tax identification number (otherwise known as an "EIN"). Each LLC will have its' own management team and allow profits and losses to be individualized and customized for each rental property LLC.

Plainfield Rental Property LLC Operating Agreement Attorneys

An LLC Operating Agreement is a written agreement, which details the governance strategy and the powers and responsibilities of the members and managers. An LLC Operating Agreement is a legal document that spells out the governance of a limited liability company (“LLC”). The LLC Operating Agreement summarizes the following information:

• The name and ownership percentages of the members

• Spells out the management responsibilities

• Dictates how new members are added and the rights and responsibilities of members to the other members.

• Details how major decisions are made and define what is a major decision. Major decisions should spell out the percentage of votes needed for specific decisions

• Whether the LLC will be managed as a member or manager-managed LLC

• Dissolution of the business process and winding down of the business process

• How profits and losses will be distributed among members

Drafting a well-drafted LLC operating agreement is important for rental property owners especially multi-member LLCs. The LLC Operating Agreement for multi-member LLCs details the rights and responsibilities of the members and managers. An LLC Operating Agreement minimizes one's liability risks for multi-member LLCs because it reduces the risks of disputes. The LLC Operating Agreement is designed to detail a process for decision-making to reduce risks and create an amicable situation for multi-member LLCs. Single-member LLCs or husband-and-wife rental property owners should also have an LLC Operating Agreement. The LLC Operating Agreement makes it easier to sell and buy real estate because title insurance companies often require minutes, resolutions, and LLC Operating Agreements to show one’s legal authority to enter purchase and sell real estate transactions.

In Illinois, there are limited liability companies or otherwise known as "LLCs" are taxed either as corporations or partnerships, or sole proprietorships. The single-member LLC is generally taxed as a sole proprietorship, which means that the owners of the LLC are taxed on their tax returns. Individual tax returns (1040) are filled out with a "schedule" called a profit and loss statement. Multi-member LLCs are taxed as a "partnership", which means that each partner or member of the LLC will report their profits and losses on their tax returns. LLCs do not need a business tax return, unlike a corporation (C corporation). The LLC also can be classified as an “s corporation”. An S corporation election is used to limit one’s tax liability for self-employment taxed based upon a person’s reasonable salary.

A reasonable salary is a method of salary payment that depends on the industry standard. The industry standard considers the following:

• The job responsibilities

• The pay for similar work in and around the geographic region where the business or employee works

• The size of the business

• What salary or wages are the industry standard for other rental property owners

Most rental property owners do not make large profits until they sell real estate investments. Rental property LLC owners need wise counsel to help them in structuring their real estate holdings. Our experienced real estate team of attorneys and support staff help rental property owners structure their business LLCs and estate planning holdings.

Shorewood Rental Property LLC Attorneys

At Gateville Law Firm, our real estate team of attorneys and support staff work with rental property owners and their families with their customized estate planning, asset protection, and real estate structure for their rental property holdings. Our real estate law firm also owns Landlord Evictions, LLC specializes in landlord evictions for rental property owners and landlords. Call us today at 630-780-1034 or contact us by filling out the online form.

Our boutique law firm can also assist rental property owners with their customized estate planning, asset protection, and rental property liability protection plans. We are the leader in asset protection and rental property estate and asset protection market of attorneys.