What the New Fees Mean for Real Estate Professionals…
Don’t you just love it when your favorite clothing store or shoe store has a great sale? Instead of the sale being a seasonal one, what if it turned out to be permanent? You’d more than likely live there and buy everything they have to offer! Well, what you’re about to read may not be as satisfying as a new pair of shoes or a new outfit, but to some business professionals; it is!
On Wednesday, December 20, 2017 Illinois Governor Bruce Rauner signed Senate Bill 867, which lowered Illinois LLC filing fees drastically! There were so many shares, posts, and inbox messages; you would’ve thought the Chicago Bears won the superbowl!
Since everyone is all about the #levelup in 2018, this was surely a reason to celebrate for many different reasons. Mainly because it’s much more affordable now to become an official legal business entity. There’s been a 4 year battle of trying to lower the fees and it finally became official and was changed on the Illinois Secretary of State website. Even though an LLC isn’t the only type of entity out there; (there are s-corps, c-corps, llps, sole props, etc) it is one of the most common. Previously at $500, Illinois had the highest LLC filing fees in the country! Now it’s lowered to $150 and you don’t have any excuse as to why you can’t officially form that business you’ve been talking about.
As stated earlier, the lowering of the fees mean many things for many people. I for one am particularly ecstatic about what it means for the real estate community!
DISCLAIMER: I am not an attorney, for legal advice be sure to seek one.
For Real Estate Agents
- If you’re a real estate agent operating your real estate business under your own name, stop it! You’re losing out on so many tax benefits/write-offs such as (gas, phone bill, dinner/lunch/coffee meetings, car maintenance, etc.) by not running your business as a business! It is illegal for two agents to form an entity under the same brokerage to do business as one, but it is NOT illegal for an individual to incorporate and act as a business under his/her own entity. Instead of getting your commission checks cut to your personal name and social security number, get those checks cut to your business name and your employer identification number! Now of course this shouldn’t be the first time you’re hearing of this, but now you have no more excuses!
For Real Estate Investors
- If you’re a current real estate investor or an aspiring one – listen up! For those who love the idea of rental property investment, most legal professionals recommend that you have separate LLCs for each rental property owned. Why? It’s simple. If a tenant slips and falls at your property they may try to sue the entity which owns the property. That particular entity could take a serious loss. Would you rather that one entity take a loss or your entire empire? Now for those who are just starting out, $500 can surely add up as you’re working to build wealth through your investment rental portfolio. But thanks to the new bill, you can now save $350 per property!
- Since the origination of the series LLC concept, a lot of individuals have incorporated this organizational structure into their businesses but many real estate professionals have not. A series LLC is pretty much a parent company that has baby companies underneath. This structure has really peaked the interest of a lot of business owners mainly because the filing fees ($500 for Illinois) were so high for years. It was much cheaper to have the parent LLC and create the baby LLCs underneath, instead of a new parent LLC each time. However, many Illinois real estate professionals have stayed far, far away from this structure. As mentioned previously, even though there are baby LLCs under the parent, if you have multiple properties under the parent LLC and one gets sued, the worry is they’ll go after the other baby LLCs also!
My OPINION – Just start a new LLC for your different properties and/or ventures, it’s much more affordable now!