If you’ve been investing in real estate for a while, or are considering buying that first investment property, the thought of forming an LLC may have crossed your mind.
It is a great choice for some. For context, about 27% of our current clients have an LLC.
There are a lot of reasons some choose this route – it can be safer for your personal assets and easier to manage to name a few. You can check our our full pro/con list on forming an LLC here.
But, if you are an investor who has decided, yes this is for me, you may be asking: What the next steps to forming an LLC in Indiana?
What is an LLC and Why Get it?
What is an LLC?
An LLC, or Limited Liability Company, is a legal structure widely adopted by real estate investors. It serves as a protective shield for personal assets, shielding investors from potential liabilities related to their properties.
Common Application in Real Estate Investing:
LLCs are commonly used in real estate investing for their flexibility, asset protection, and tax advantages. They provide a structured way to manage properties and shield personal assets from potential legal issues arising within the investment.
Consideration Before Forming an LLC
Location Matters
One crucial aspect is to form your LLC in the state where your properties are situated. This ensures compliance with local regulations and streamlines the management of your real estate assets. We recommend checking your state’s website or resources like the SBA’s business guide for specific guidelines.
This blog is specifically for the state of Indiana. Your state may have other requirements.
Biennial Reports and Separation of Assets:
Filing biennial reports is a critical aspect of keeping your LLC in good standing. Additionally, maintaining a clear separation between personal and LLC assets, including bank accounts and credit cards, is vital to uphold the integrity of your LLC’s liability protection.
Steps to Forming Your LLC
1. Naming Your LLC in Indiana
Choosing an appropriate name for your LLC involves adherence to specific guidelines. Ensure the name is available and aligns with your brand image and real estate ventures.
Indiana requires a unique name per LLC, so yours must be original before approval. You can also check names on the Indiana State site.
You may also reserve a name for up to 120 days.
2. Selecting an Indiana Registered Agent
An Indiana Registered Agent is crucial for handling legal documents and correspondence. Choosing one within the state streamlines communication and ensures prompt attention to official matters.
3. Filing Your LLC's Article of Organization
The Articles of Organization is a foundational document, detailing your LLC’s business name, address, and key contact information.
This is how other entities including the government will contact you so be sure it is all accurate and up to date.
5. Obtaining an EIN for Your LLC
An Employer Identification Number(EIN) is mandatory in Indiana.
What's Next?
Transfer Title of Home(s) to LLC
After settling with the lender and existing mortgages within the property in your LLC, you should obtain a form of a deed. You fill up a form if you would like to have a warranty deed or quitclaim deed.
- If you transfer title through a quitclaim deed, you are simply saying that you are passing any interest you might have in the property to your LLC.
- If you would like to have a warranty deed, it includes a guarantee that the title was good and free of any claims or interests by third parties.
Update and Amend Lease or Rental Agreements
Be sure to update any of your official paperwork to reflect the new LLC.
