In this episode I discuss the need for forming your business entity, and when it makes sense to do it.
First and foremost, this is not a legal podcast. I am not giving you legal advice. I am simply giving you my opinion on what is practical based on experience. Please consult a lawyer and/or your CPA before taking any actions (or lack thereof).
- For purposes of legal liability and taxes, a business entity is an absolute must.
- Tax implications are explained very well in episodes 51 and 57. Please check those shows out if you have not yet done so. I interviewed CPAs and discussed business entities in good detail.
- From a practical standpoint, I always tell new investors to do their first deal before they worry too much about forming an actual business entity. I say this because too many people let the business entity formation stop them from getting started.
- The idea is to start your business. Having one rental or doing one flip without forming a business entity is really probably not a big deal in my opinion.
- Business cards, stationery, T-shirts, and forming an LLC are all things people busy themselves with to distract them from the work that it takes to actually launch their business and make money. It is easier to design and buy a business card than it is to put an offer on a property, rehab it, and flip it for profit.