Once you pierce the corporate veil you lose protection anyway. I have been going with a trust instead of my corporation on real estate transactions for the last 4 years. To me it seems I have a lot more options and less sipulations
Definately incorporate. If you get sued you may get one property wiped out but that is better than all of them (if you hold each of them in a separate entity). There is a long list of things to talk about here. Consult an attorney and i'm sure he/she can ramble off for 30 minutes on the benefits.
The only disadvantages are cost and that you must be careful not to pierce the corporate veil. Both of these are relatively minor.
The suggestion of having each property in a separate coporation or LLC is a good one for accounting and asset protection. Each corporation must have it's own bank accounts, and all income and expenses. You do not want to mix personal assets with corporate ones. IE do not write a personal check to pay a liability- or you really are not operating as an entity. If you mingle the money it opens the door to creditors/ or someone to sue you personally. The flip side is- cost to set up corporations, cost to have individual accounting/ income taxes/ asset accounts... Lenders will allow you to vest in corporation/llc/or trust which was mentioned but there also may be additional cost.
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Once you pierce the corporate veil you lose protection anyway. I have been going with a trust instead of my corporation on real estate transactions for the last 4 years. To me it seems I have a lot more options and less sipulations
Lori
[addsig]
Definately incorporate. If you get sued you may get one property wiped out but that is better than all of them (if you hold each of them in a separate entity). There is a long list of things to talk about here. Consult an attorney and i'm sure he/she can ramble off for 30 minutes on the benefits.
The only disadvantages are cost and that you must be careful not to pierce the corporate veil. Both of these are relatively minor.
GOOD LUCK
Thanks for the responses. Please enlighten me with the term "pierce the corporate veil'.
The suggestion of having each property in a separate coporation or LLC is a good one for accounting and asset protection. Each corporation must have it's own bank accounts, and all income and expenses. You do not want to mix personal assets with corporate ones. IE do not write a personal check to pay a liability- or you really are not operating as an entity. If you mingle the money it opens the door to creditors/ or someone to sue you personally. The flip side is- cost to set up corporations, cost to have individual accounting/ income taxes/ asset accounts... Lenders will allow you to vest in corporation/llc/or trust which was mentioned but there also may be additional cost.
Due to the costs of corporations that is why I use a trust. There is no cost. Unless you pay the trustee
Lori
[addsig]