Entities for Real Estate or Business
Today we’re digging into a more technical and less glamorous topic - but it’s a crucial one if you are serious about having a business. We’re talking all about forming legal entities like Limited Liability Companies (LLCs) and corporations to protect yourself and your real estate & business assets. It’s important to get this right from the beginning, so today’s guest is laying some of the groundwork you need to know.
Michael S. Brady is Executive Vice President of Madison 1031, a national Qualified Intermediary for tax-deferred Exchanges pursuant to Internal Revenue Code §1031. As an attorney, Mr. Brady has over 25 years of experience representing clients in commercial and residential real estate transactions, as well as a wide variety of business transactions and commercial litigation matters.
In this episode Michael walks us through a couple scenarios for owning a real estate business and things you need to think about for your legal entity’s structure. We also talk about the differences between LLCs and corporations, when you may want to work one-on-one with a lawyer instead of just using something like Legal Zoom, and some of the contingencies you need to plan for when setting up your business.
In this episode, we’re discussing…
Why setting up an entity structure for your business is critical.
Why you would want to get a property you own out of your own name and into an entity.
Why you want to operate your properties as a business.
Some of the additional questions you need to ask and answer based on which legal entity you choose to form.
When and why you may want to use a service like Legal Zoom to file things like articles of organization versus sitting down and speaking with an attorney.
Michael’s Top Tips:
Limiting your liability is key – getting a business or piece of real estate out of your own name and into a legal entity is one of the best ways to protect yourself and your assets. Don’t skip this step - run your business like the business it is from the start.
Know when to work with a lawyer - sometimes you may not need to pay for a lawyer’s time expertise, and filing paperwork online will get you where you need to go. But if you’re weighing up several different options for your entity, you may want to sit down with a lawyer and talk everything through. Do your research and make sure you get one-on-one legal help if you aren’t sure.
If you’re forming a company with several people, you should probably work with a lawyer – if you are forming a corporation, there are a lot more people involved: a board of directors, shareholders, and more. You need to make sure you follow the formalities of the corporate structure, but also draw up internal documents for things like splitting profits, what happens in the event someone is incapacitated, etc.
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Michael Brady | Madison 1031 | LinkedIn | mbrady@bradyadvisor.com
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ABOUT MICHAEL BRADY
Michael S. Brady is Executive Vice President of Madison 1031, a national Qualified Intermediary for tax-deferred Exchanges pursuant to Internal Revenue Code §1031. As a Certified Exchange Specialist® and attorney, his responsibilities include consulting with clients and their advisors to provide guidance on the regulations affecting §1031 Exchanges, as well as overseeing Madison 1031 Exchange’s national sales and marketing e orts. His seminars have received rave reviews for being both entertaining and informative, and his audiences have included top law and accounting firms as well as brokerage companies nationwide.
Mr. Brady has published many articles on tax and legal issues and is the primary author behind the Madison 1031 Zone blog. Prior to joining Madison 1031, Mr. Brady headed up other leading 1031 exchange companies, overseeing several thousand 1031 exchange transactions during his career. As an attorney, Mr. Brady has over 25 years of experience representing clients in commercial and residential real estate transactions, as well as a wide variety of business transactions and commercial litigation matters, and has acted as general counsel to a title insurance company
