Pros and cons of LLC for real estate agent [Videos]



Last updated : Aug 8, 2022
Written by : Dalton Kaaz
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Pros and cons of LLC for real estate agent

What are 3 disadvantages of an LLC?

  • Cost: An LLC usually costs more to form and maintain than a sole proprietorship or general partnership. States charge an initial formation fee.
  • Transferable ownership. Ownership in an LLC is often harder to transfer than with a corporation.

What is the pros and cons for LLC real estate?

Three advantages to using an LLC for rental property are pass-through of income and losses, protecting personal assets, and creating a flexible ownership structure. Drawbacks to using an LLC include possible self-employment tax, difficulty of financing, and annual fees.

What is the advantage of putting real estate in an LLC?

With the benefits of asset protection, tax savings and estate planning aids, the California real estate holding LLC has become the preferred entity for holding individual investment properties. The LLC offers the prized limited liability protection afforded to the corporation, but without the negative tax implications.

Can real estate commissions be paid to an LLC in New York?

Fees and commissions earned from a real estate transaction may only be paid to a licensed salesperson or broker. As such, any payments to an unlicensed LLC (or other unlicensed entity) are impermissible.

At what point do I need an LLC?

Who Should Form an LLC? Any person starting a business, or currently running a business as a sole proprietor, should consider forming an LLC. This is especially true if you're concerned with limiting your personal legal liability as much as possible. LLCs can be used to own and run almost any type of business.

What can you write off with an LLC?

  • Car expenses and mileage.
  • Office expenses, including rent, utilities, etc.
  • Office supplies, including computers, software, etc.
  • Health insurance premiums.
  • Business phone bills.
  • Continuing education courses.
  • Parking for business-related trips.

Can you live in LLC rental property?

An LLC is a business entity that has its own rights, and buying and owning real estate are indeed among them. So the answer is yes, you can in fact live in a house that is owned by your LLC — as long as your operating agreement allows it.

How much can I write off on a rental property?

  1. Rental property owners can deduct the costs of owning, maintaining, and operating the property.
  2. Most residential rental property is depreciated at a rate of 3.636% per year for 27.5 years—what the IRS considers the property's "useful life."1.
  3. Only the value of the buildings can be depreciated.

Should I invest through an LLC?

If you're looking for a way to protect your personal assets and limit your liability, setting up a limited liability company (LLC) for investing might be the right choice for you. An LLC can provide several benefits when it comes to investing, including asset protection and tax savings.

Can my LLC buy my house?

You may wonder, "Can an LLC buy a house?" The short answer: Yes. You may want to explore the idea of buying a house with an LLC to enable your business to own property or to have your LLC make your next real estate purchase.

How does Home LLC make money?

Home. LLC is a fractional home ownership service that helps owners access the equity in their home through an investment rather than a loan. Home. LLC primarily makes money by investing alongside an owner and generating revenue from appreciation in the home sale value.

What does LLC stand for in real estate?

A limited liability company (LLC) is a popular business structure for real estate companies involved in the business of buying, selling, or renting commercial or residential real estate.

How do I name my real estate LLC?

Keep the name short, simple, and to the point with 1 to 3 words at the most. Stick to basic names such as the rental property street address, the neighborhood, or the part of town in which the home is located.

What can I do with a real estate license besides sell houses?

  • Leasing consultant.
  • Real estate assistant.
  • Title examiner.
  • Real estate paralegal.
  • Apartment manager.
  • Property manager.
  • Home inspector.
  • Real estate marketing specialist.

Can a Realtor be an LLC in Florida?

The statute also allows a license to be held as a Professional Corporation (PA), a Limited Liability Company (LLC) or a Professional Limited Liability Company (PLLC, which can also be abbreviated as PL).

Is it better to be self employed or LLC?

You can't avoid self-employment taxes entirely, but forming a corporation or an LLC could save you thousands of dollars every year. If you form an LLC, people can only sue you for its assets, while your personal assets stay protected. You can have your LLC taxed as an S Corporation to avoid self-employment taxes.

Should I start an LLC before making money?

Is an LLC Necessary To Start a Business? You don't need to start an LLC when establishing your business. However, if you want to differentiate between your assets and the company, an LLC is the right way to go. You should start an LLC if you want to start a business and protect your personal assets.

What are tax benefits of an LLC?

LLCs avoid double taxation while enjoying personal liability protection. Unlike a corporation that pays taxes twice on the same profit, first as business income and then again as owner income, LLC shareholders are only taxed once on profits in their personal income.

Can you write off car payments for LLC?

Can my LLC deduct the cost of a car? Yes. A Section 179 deduction allows you to deduct part of or the entire cost of your LLC's vehicle.

How does an LLC avoid paying taxes?

A general Corporation making a Subchapter “S” Election or an LLC with or without a Subchapter S Election pays no federal tax on its taxable income and no employment taxes on its distributions to stockholders.


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Pros and cons of LLC for real estate agent


Comment by Keith Karrenberg

Thanks for this great article


Thanks for your comment Keith Karrenberg, have a nice day.
- Dalton Kaaz, Staff Member


Comment by Lyndon

up guys my name is darren williams and welcome to vlog seven so today i want to discuss with you guys why as a real estate agent you should have an llc but before we jump into that please take a moment to like and subscribe to this video i really appreciate it so go ahead do that right now i give you five seconds okay so back to what we're discussing today why you need an llc as a real estate agent as you know most if not all real estate agents are independent contractors which means all of our earnings are 100 commission base if you don't produce you don't need you are a small business and you should set yourself up like one and the easiest way for real estate agents such as myself to do this is to form a single member llc now i just did this last month so this is not something i'm preaching to everybody i meet i'm sharing information that i just found out recently with you guys so what is an llc an llc first of all stands for unlimited liability company a limited liability company is a u.s specific form of a private help limited company it is a business structure that can combine the past taxation of a partnership or sole proprietorship with the limited liability of the corporation so what does that mean simply put all the money that your business generates that you generate as a real estate agent will pass through directly to you as business income and one of the benefits that this provides is that you won't be taxed federally at the corporate level but that's your individual income tax rate which is awesome um another benefit is what's called pass-through taxation which we just read a moment ago in the definition of an llc so what is pass through taxation this means that the business profits will pass through to its members to be reported on their personal tax returns all profits only tax once at each member's individual income tax rate so that's just something we just mentioned earlier again faster just simply means altering capacity to you you can tax the individual not as a company another flexibility that an llc will provide you as a real estate agent is being able to select yourself to be taxed as an s corporation which means the irs can save you money on self-employment taxes which is very important because you are self-employed as a real estate agent and you want to save taxes as much as you can so you don't get audited every year fun fact real estate agents are the most audited individuals in the united states it's crazy right another benefit is separating business finances personal finances most real estate agents made this mistake your first year by co-mingling the money that they earned from other rentals or sales or their personal finances and putting business expenses such as uber to an appointment on your credit card or your debit card and you want to keep those things separate again for tax benefits at the end of the year because you want to be able to legitimately write off a lot of things so it's best to have an llc and then a business bank account so you can separate those finances which is another benefit once you create yourself as an entity to be able to do these things so what are you going to do today one you're going to like this video again and subscribe again and share it to your friends and family two you're gonna go create an llc today if you just got your real estate license you should definitely do that before you start any transaction if you have your license for a year or more now and you haven't set yourself up at the telos you should definitely take time to do that and where you can go to do that is your state's local government website if you're in new york city you can go to business.ny.gov to set up your llc it's only going to cost you 200 bucks and it's worth the investment thank yourself later when you start making bad money as a real estate agent or you can go to websites such as legalzoom this is not an advertisement for them i wish it wasn't because but this is not that so that is an easy way for you to set up an llc trust me you will thank yourself later in the future once you do that and it also makes you just look more professional as a real estate agent as you have your stuff together and people do wonders for your business in the near future and i just learned this recently so i just wanted to share that with you guys so if you're a real estate agent and you're watching this video please leave a comment below if you have any questions about foreman llc or if it's better to set up your llc in another state that you don't live in for other tax purposes or whatnot just leave me a comment below and i'm gonna go do some real work now vlog


Thanks Lyndon your participation is very much appreciated
- Dalton Kaaz


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