Forming LLC in VA for investment property

[BhaiBhai]

Hi All, this is my first post and new to this forum. Appreciate all the help i can get from you experts.

My question:
I'm CT resident buying a investment property in VA with a business partner( not spouse). Business partner resides in VA. I was wondering whether it make sense to open an LLC and have the LLC name on the property papers ?
Also, what would be challenges to open LLC given one the owner will be from another state? what documents are required to open LLC and what things to be kept in mind when there is a business partner in the LLC. All helps are appreciated. Thanx in advance.

 

[Taxing Matters]

Hi All, this is my first post and new to this forum. Appreciate all the help i can get from you experts.

My question:
I'm CT resident buying a investment property in VA with a business partner( not spouse). Business partner resides in VA. I was wondering whether it make sense to open an LLC and have the LLC name on the property papers ?
Also, what would be challenges to open LLC given one the owner will be from another state? what documents are required to open LLC and what things to be kept in mind when there is a business partner in the LLC. All helps are appreciated. Thanx in advance.

Since you have a partner in this deal it is a good idea to use a LLC or LLP to hold the property. It is not terribly difficult to form the LLC. However, because you have a partner you really do need to have a well written charter and operating agreement (for a LLC) or partnership agreement (for a LLP) that spells out in detail how this deal will work between the two of you. For that, you should see a business attorney to ensure you have all the bases covered. Depending on the details of this deal between you there may be a need to include specific tax provisions in the agreements, too.

 

[FlyingRon]

Virginia is a pretty easy state to start LLCs. I'm fairly sure you can do it online and the fee is minimal (I think I pay $50/year to keep mine going).
As TM points out, the harder part is creating the operating agreement that controls how the entity will function.

 

[BhaiBhai]

Thanx Taxing Matters and FlyingRon.
This is very helpful, are there any business attorney online that can help?
Do I need to submit the business agreement now while opening up LLC or can I have it added at later date ? Post closing of the property deal. Business Partner is someone I know for 15 years and trust that person very well. Reason for later date is we are heavily engaged in investment property buyout due to closing date approaching soon (in 13 days).

FlyingRon: which online site do you suggest for opening LLC.

thanx in advance

sorry for additional questions.

 

[FlyingRon]

You do it directly with the Secretary of State office: https://sccefile.scc.virginia.gov/NewEntity

 

[Taxing Matters]

Thanx Taxing Matters and FlyingRon.
This is very helpful, are there any business attorney online that can help?

You can find various sites that will help you search for an attorney. But do your due diligence and check out the attorneys that are suggested to make sure you find someone who will meet your needs.

Do I need to submit the business agreement now while opening up LLC or can I have it added at later date ?

You can just do the bare bones Articles of Organization to set up the LLC in Virginia. You can also register it online, too. And you can do the operating agreement later on. But while you can do that, the smart thing is to have a detailed operating agreement/partnership agreement in place before you start the business or the investment. If you don't do that and you and your partner find you cannot agree on terms later you might get screwed, especially as you are the out of state partner.

Business Partner is someone I know for 15 years and trust that person very well.

I wouldn't go into business or enter into a significant investment with my best friend of over 30 years without ironing out exactly how everything is going to work ahead of time and putting that in writing. Even if you trust you friend, if you don't work out these details first you may find later you each have very different (and potentially irreconcilable) views on how the arrangement was to work. I've had clients who started businesses with close friends/relatives and because they had that relationship didn't do this critical step as they assumed they'd always be on the same page. Then later on everything goes to hell when they find out they do not, after all, share the same views on how things should go. You really don't want to be the person having to see a lawyer when that happens, it's expensive and messy to sort those things out later. It's much better to work it out ahead of time and then you'll have much less risk of problems down the road.

 

[BhaiBhai]

You can find various sites that will help you search for an attorney. But do your due diligence and check out the attorneys that are suggested to make sure you find someone who will meet your needs.



You can just do the bare bones Articles of Organization to set up the LLC in Virginia. You can also register it online, too. And you can do the operating agreement later on. But while you can do that, the smart thing is to have a detailed operating agreement/partnership agreement in place before you start the business or the investment. If you don't do that and you and your partner find you cannot agree on terms later you might get screwed, especially as you are the out of state partner.



I wouldn't go into business or enter into a significant investment with my best friend of over 30 years without ironing out exactly how everything is going to work ahead of time and putting that in writing. Even if you trust you friend, if you don't work out these details first you may find later you each have very different (and potentially irreconcilable) views on how the arrangement was to work. I've had clients who started businesses with close friends/relatives and because they had that relationship didn't do this critical step as they assumed they'd always be on the same page. Then later on everything goes to hell when they find out they do not, after all, share the same views on how things should go. You really don't want to be the person having to see a lawyer when that happens, it's expensive and messy to sort those things out later. It's much better to work it out ahead of time and then you'll have much less risk of problems down the road.

Very informative.. I will try to address this as soon as possible. Thanx again.

 

[BhaiBhai]

You do it directly with the Secretary of State office: https://sccefile.scc.virginia.gov/NewEntity

Thanx