Do I need a business bank account? What kind? Why? How?

Rentpost requires that a business bank account is set up in order to collect rent. You do not need to file anything with the state in order to set up the business bank account as a sole proprietor. If you are able to go to the bank and set up a business account, noting that you are doing business under your own name, than you should be able to set up a business account with your Social Security #, and we will be able to deposit your rent into that account. We can further assist you in filling a DBA (doing business as) or articles of organization for a Limited Liability Company. The process is surprisingly swift and inexpensive. Either way, sole proprietors need not file anything, and may still open business bank accounts

I'm interested in setting up an LLC, could you tell me more?

Forming an LLC is done by filing the Articles of Organization with your Secretary of State. In Texas, you may do this online at the following link: http://www.sos.state.tx.us/corp/sosda/index.shtml - you must create an SOS account, and there will be a filing fee (I'm guessing between $40-$75), and the process usually takes around 10 mins. You will be asked a few questions about the business, and who you would like to be a registered agent. One the articles are filed, save a copy for your records.

The next step after filing your LLC is to get a Tax ID number from the IRS. This can be done at irs.gov, and the process is very quick and the fees are very small ($5-10).

Next, is to set up the bank account, take to your bank a copy of the Articles of Organization, your IRS documents with Tax ID #, and you will be able to establish a bank account for newly formed LLC.

If you would like the LLC to actually own the property, giving you a protection from liability, please read below...

Remember, it is important to keep the funds of your LLC separate from your personal use funds. Otherwise, you might breach the liability shield of an LLC.

The biggest benefit to forming the LLC is the liability shield. If there is ever any legal action, resulting from activities involving your rental unit, your personal finances will not be compromised. To get all this liability protection, you must make the LLC the technical owner of the rental units, and you will file taxes for the LLC separately.

You may transfer the property ownership by filing a Quitclaim deed with your county courthouse, saying you are transferring ownership to the LLC, and you should execute an acceptance of ownership on behalf of the LLC. Filling the quitclaim deed will cost around $15-20.

From that point on the LLC will be the owner of the property, while you and any partners will actually own the LLC. Just remember that the LLC's funds (and not your own) must be used to pay for expenses on the property, insurance, taxes etc. You pay yourself money from the LLC's funds by making an "owner distribution" or by issuing dividends.

Another important piece to forming an air tight LLC will be signing an Operating Agreement, but if not there will be default Operating Guidelines set forth by your state's code on the matter.

I hope this has been helpful; if you need assistance locating the appropriate documentation, or if you would like a Rentpost representative to organize a file of documentation for you, we are available to do so. Let us know how we can help.