Limit personal liability with an LLC
As long as you operate your LLC according to the rules of your state and maintain a clear separation between your finances and the LLC’s finances, you should be able to enjoy significant protection against liability. That means if someone sues you as a landlord, such as if they are injured on your property, they will be limited to seeking damages from the LLC and not your personal assets. Fortunately registering and running an LLC is not as hard, or as expensive, as it might sound.
In addition to limiting liability for legal trouble, an LLC can help simplify business taxes and potentially help decrease your tax liability. If you keep your personal finances and your LLC finances separate, it can help you find additional deductions and it also makes it easier to file taxes each year. You don’t have to hunt through all of your transactions to determine which are for your rental property and which are personal.
Property and business management
Like home ownership, being a landlord is often a lot more work than most people think. Simply put, keeping up a property and keeping tenants happy can be challenging, and approaching the challenge as a business helps to keep things organized. This is especially true when landlords have multiple units or properties. Registering an LLC helps provide structure to focus on managing the business side of being a landlord. This can include activities that can help improve profits, like finding new tenants, maintaining the property, making property improvements, cutting costs, looking for a new investment property, or taking on business partners.
When hiring help for property management or repairs and maintenance, an LLC can provide valuable protection for property owners. If a landlord becomes an employer, an LLC can help provide a structure for hiring and managing workers. If a property manager or other worker makes a costly mistake, a properly registered and run LLC limits the liability of the LLC owner.
Ways Rocket Lawyer supports landlords:
- Register your LLC.
If you decide to register an LLC as a landlord, or for another business venture, with a Rocket Legal+ membership, you can register your first LLC for FREE (excluding state fees). Rocket Legal+ members also get HALF OFF Rocket Lawyer Pro Services, including registered agent services and Rocket Tax.
- Talk to a Legal Pro.
From bad tenants to bad contractors or problems with the city, county, or HOA, getting answers from a Legal Pro can put the power in your hands to make better decisions. Download the Rocket Lawyer mobile app to get fast, affordable, and convenient legal help on any device, anywhere, anytime.
- Everything legal all in one place.
From your Lease Agreement that you’ll want every tenant to sign to the Eviction Notice you hope to never have to send, Rocket Lawyer provides landlords with the legal support they need, at a fraction of the cost. Getting your contracts reviewed by a Legal Pro, electronically signed, and stored all in one place can be convenient, easy, and affordable. Let Rocket Lawyer connect you with everything legal.
This article contains general legal information and does not contain legal advice. Rocket Lawyer is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.
