Anyone form a corp or LLC for doing birddogging?
I know that it is recommended for wholesaling, rehabbing, etc... but is there anyone out there who is only birddogging at the moment and formed a corporation or limited liability company for that purpose? Or do most birddoggers operate as sole proprietors? I eventually want to wholesale and rehab, but I would like to get my feet wet and gain experience as a bird dog first. Any advice would be greatly appreciated.
One of the main reasons you would create an LLC for any business is to protect yourself from legal liability. While wholesaling, rehabbing, and even flipping you either own the property or at least are in the chain of title (read: you can be sued). In this case it is good to have a company (LLC) be the sole entity owning operating the property in case of the proverbial person who slips and falls. The LLC would be all the person suing could get (provided you set it up and maintain it properly) not your personal house or other belongings.
In bird-dogging you are not in the chain of title and are doing few things that people would feel that they could sue you for (which does not mean that they won't since we sue for everything these days). Therefore it doesn't seem that necessary to have an LLC. This doesn't mean that you can't and it will probably give you some better standing with the IRS when you want to write off as business expenses all your bird-dogging activity.
Hope this helps.
Great Luck,
KP
Thanks a lot for the useful info. I had thought that it might be better to leave my personal info out of it, even though I am just starting. For business cards, fliers, etc. Again, I really appreciate the info.
Hi Sith005,
Before we discovered this great site, my fiancee and I formed an LLC for the purpose of bird-dogging and later buying and selling homes. We are in Nevada.
It depends on exactly what you want to do later (re: Description on LLC)
You might also want to check with your Real EstateCompliance Division and Business Licensing if you are going to do other stuff later.
Good to know. Thanks!
I am also starting birddogging with the intention to move on to flipping, leasing, and owning. I'm choosing to incorporate now so that 1) I can write off as much as possible in terms of expenses and educational materials and 2) so that when I move into the other activities, I'm ready to go from an entity standpoint.
I've also read (I am NOT a lawyer or accountant) that it is best to do birdogging, flipping and rehabbing (or "dealing" activities) in an entity separate from the leasing/landlording ("investment" activities) so that the "dealing" activities don't "contaminate" the "investing" activities. If "contamination" occurs, the investment activities can then be characterized as dealing and lose the advantages of investment properties (ie: deprecation).
The same presentation suggested using a C corp and individual LLCs for dealing due to the tax treatment, certainty of case law regarding C corps (relative to LLC's) and the fact that the LLC's are transparent for accounting purposes. Additionally, you want one C corp so that you can be an employee and enjoy many of the tax writeoffs C corps provide.
It suggested leasing/landlording in a LLC with individual LP's (LLC as general partner) due to the ease of using a LLC (relative to C) and the creditor protection provided by LPs.
Well, I've gone on too long. Again, I'm not an attorney, and certainly different states have different laws, but hopefully the above opens up some issues for exploration and consideration.