Wondering how to set up an LLC for real estate flipping? We have the answer. Flipping houses can be a very lucrative business, but a large piece of the puzzle that can be the deciding factor on just how profitable it can be is how your business is legally structured. There are different implications for the different legal structures, and for house flipping, setting up your business as an LLC is good for asset protection.
Why is this important? Mainly because an LLC (which stands for limited liability company) sets up a legal barrier between your business and your personal finances. Without an LLC, if you are sued and you don’t have your business legally structured, that everything you own is potentially targeted as collateral for a legal judgement against you. If the judgement goes poorly, then say goodbye to your personal assets (like your car, your house, your belongings, etc.). An LLC stops all that from happening.
So, if you’re serious about making real estate flipping into a serious business (and money-maker), then doing something like arranging your business as an LLC is essential. It should be noted that some states differ in how to set up an LLC (such as in New York, where you are required to publish an LLC formation public notice). Generally, the steps are the same or very similar between states. Here’s a good look at how to set up an LLC for real estate flipping.