Investing in real estate can be a great decision that leads to reliable, recurring income. If you want to invest in Florida real estate, don’t rush into things. There are various factors and options to consider if you want to make the best decisions. One beneficial approach that some people take is to invest in real estate using a Florida LLC.
So how do you create an LLC in Florida and invest in real estate? Keep reading to find out.
How to Create an LLC for Florida Real Estate Investments
There are various steps you need to follow to create an LLC for investing in real estate in Florida. Note that this process can vary slightly based on certain factors.
1. Name Your LLC
This is the first and most simple step. You just need to make sure the name is unique and isn’t in use by any other registered business in Florida.
2. File the Articles of Organization for Your LLC
Articles of Organization file essential details about LLCs and place them on the public record. This includes your LLC’s name, street address, and mailing address. You also need to have a registered agent.
The Articles of Organization must list everyone with the authority to manage your LLC. This step isn’t as complex as it may seem, you simply need to supply the right information.
3. Pay the Filing Fee
All LLCs need to pay the current filing fee. At the time of writing, it’s $125 which includes the filing fee and registered agent fee. There are additional fees for optional documents: certified copy and certificate of status.
4. Create an Operating Agreement
This step isn’t required for an LLC to invest in Florida real estate, but it’s recommended. Various legal complications can arise for an LLC, and an operating agreement can make things easier.
Third parties could cross your operating agreement if they want to try to hold you liable for the losses of the LLC. With an operating agreement, you can specify the structure of the LLC. You can also detail the duties, management, and rights of the business entity.
5. Get an Employer Identification Number (If Needed)
You need to get an employer identification number (EIN) if you want to hire employees or to be taxed as a corporation. You can apply for one through the IRS. They’ll review your submission, and if there aren’t any issues, you’ll get your EIN immediately.
6. Register With the Department of Revenue (If Needed)
You need to register with the Florida Department of Revenue if your LLC sells goods/services or collects sales tax. To do this, you must complete and submit form DR-1 Business Tax Application. It needs to contain details on the activities of your LLC as well as demographic information.
7. Get the Business Licenses You Need
In most cases, a business license isn’t needed for an LLC to invest in real estate in Florida. A license is required for real estate agents, but just investing isn’t the same.
With that said, you should still think about any business licenses that are needed for your LLC. This may be the case depending on your specific business activities. You can talk to a real estate lawyer in Florida and they’ll be able to advise you of any licenses you need.
8. File Your Annual Report
Once your LLC is operational there are some practices that you’ll need to follow. One of the most important is filing your annual report.
This involves confirming the information you filed in your Articles of Organization is correct. The annual filing fee is $138.75. Make sure you file this in time as there’s a late filing fee of $400.
Factors to Consider
There are some things you’ll need to take into consideration based on the operation of your LLC. If you need any assistance, professional Florida lawyers should be able to guide you.
Is it a Single-Member LLC?
A single-member LLC (SMLLC) is one with just one member. If you’re the only member, you establish the operating rules for your LLC.
Even though it’s just you, the LLC still maintains a formal corporate structure. This helps to keep you protected in certain legal situations.
Why Set Up an LLC If You’re the Only Member
Creating an LLC will limit your financial liability. If there’s an unexpected problem with any of your investments, your personal assets won’t be at risk. It essentially serves as a risk management tool so that you can invest with a level of protection.
Should You Create an LLC for Each Property?
This is something you can do for additional protection. If you create a separate LLC for each property you invest in, issues with one of these properties won’t affect the others. For example, if someone has an accident at one of your properties, they can only collect from that LLC.
If you have multiple properties under one LLC, someone could claim from all of them. It takes a bit more money and time to create separate LLCs, but most investors consider it worthwhile due to the protection it offers.
Make Sure You Understand Relevant Laws
Before you make any investments, you should determine the activities you want to pursue. You can then look at local laws to ensure you won’t be breaking any. Short-term rentals (e.g. Airbnb), for example, are more heavily regulated than in the past, so you may need to consider this.
Your activities may require you to get additional licenses; in this case, a license to operate a short-term rental. A professional lawyer in Florida will help you determine exactly what you need based on your plans.
Investing in Florida Real Estate as an LLC
You could make a lot of money by investing in Florida real estate, and you may want to register an LLC to do so. You need to go through a process to set it up, but the protection it offers is well worth it. You may even want to create multiple LLCs if you’re investing in more than one property.
Boyer Law Firm is a leading law firm in Florida that has plenty of experience with real estate. We focus on clarity, technology, and commitment and have been in business for over 15 years. Contact us today for professional guidance on your real estate investments.