Creating a Limited Liability Company (LLC) for any investment properties you buy is an excellent way to protect your personal finances against any liability or loss associated with your rental home. Smart landlords ensure they have enough insurance and liability protection in place, but if a lawsuit should result from a random accident, you don’t want your tenant to be able to sue you personally. An LLC will create a buffer between you and all that risk.
Creating Your LLC
Creating an LLC is not complicated, and you can probably do it without hiring an expensive attorney. Choose a name for your company and file it with the Georgia Secretary of State, in the Corporations Division. File your Articles of Organization, which basically outlines your company structure and purpose. You can file online or by mail, and the fee is currently $100. You’ll need to appoint a registered agent and file registration paperwork every year. If you’re out of state or out of the country, you’ll need to name a registered agent who is local to Georgia. This is where a property manager can help.
Transfer Your Property Deed to the LLC
After you’ve established your LLC, it’s important to transfer the deed of your rental property into the LLC’s name. Sign the transfer deed and file it in your county court. If you form the LLC before you buy a property, you don’t need to worry about the deed. Instead, the LLC will simply be the registered buyer and owner of the property.
Keep Your LLC in Compliance
To properly protect you, it’s important to keep your LLC in compliance. Send in your annual registration materials, and pay the annual fee when it’s due. Make sure you keep your personal funds separate from the LLC funds. Some investors will start a new LLC every time they buy a property, rather than keeping all of their properties under one LLC. This is something to consider if you own multiple investments and you want to keep them protected separately. Finally, make sure your insurance policy reflects the LLC as the insured.
Using an LLC for your rental properties makes good financial sense. If you have any questions or you need any help, please contact us at Bailey & Hunter.