How to start a real estate investing company – part 2
You may remember a couple months back, we wrote part 1 on “How to start a real estate investing company“… well, part 2 is ready.
In part 1 we go over creating your business name and deciding on which business entity is right for your company. If you haven’t yet read part one, click below to head over to that post first, then come back to part 2 to get caught up.
Part 1: How to start a real estate investing company
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Part 2: How to start a real estate investing company – Filing the paperwork with the state
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In part 2 you will learn exactly what you need to do to file the paperwork to get your company “legal” in the state(s) that you do business in.
I know, this stuff sounds boring… but these steps are very important to making sure your business foundation is set up correctly.
Even if you are paying another company to do this stuff for you, you should know the process. I know that I like to know the basics of every aspect of my business just so I know when things look right and when they look wrong.
Let’s go!
How to File the Paperwork to Make Your Business Legal -
Each business entity requires specific forms, fees, and filings before your business is a legal entity. If you choose to register your business yourself you will need to know exactly what the states you do business in require and how to file correctly. If you choose to have a professional firm register your business for you (recommended) it will all be taken care of for you.
If you’re one of the ones who finds it hard to spend a couple hundred bucks to have a professional firm register your business for you, you should first get a hold of your Secretary of State and Business Revenue offices. Once you have decided which business entity type you wish to use (with the help of someone experienced or a tax professional) give the office a call and ask them to steer you in the right direction. Ask them for contact information for the offices and agencies that you will need to contact.
If you are filing an LLC, in most states it is rather simple. You fill out the paperwork, fax it in with your payment and that is it. However, each state is different and you should do your homework before just sending everything in. To save you a bit of time we have compiled a list of links to each Secretary of State web site in the country and placed them on this page. Scroll down to your state and go to the web site to find out exactly what you need to do.
Before you do that… I want to drill it into you how important it is that you register your business correctly. If you are using an LLC and you are the only owner, it is very simple to do. However, if you are using a corporation or some type of partnership I would advise you to seek the help of a professional. I assure you, it will be well worth the couple hundred bucks it costs you to do it right. Also, these companies register businesses for a living. Do you want your businesses safety (your personal safety and well being too) and well being to be at risk because you couldn’t buck up a couple hundred bucks? If you are at all unsure about anything involved in the registration and filing process, PAY TO HAVE SOMEONE DO IT FOR YOU!!. We recommend several companies that do an excellent job. Check them out.
- Bizfilings.com – Excellent company with solid track record.
- legalzoom.com – Corporations Page - Excellent resources and services
- legalzoom.com – LLC Page
It will usually cost between $100 and $300 to have the entire company set up for you correctly by professionals who do it every day… so for most people that’s the best way to go. This is definitely one of those tasks that needs to be outsourced to professionals if you are not experienced in this kind of thing.
If you want to do it yourself, or find out more information on how to register your business in your state, check out the list below.
Here is the Secretary of State list:
- Alabama
- Alaska
- Arizona
- Arkansas
- California
- Colorado
- Connecticut
- Delaware
- District of Columbia
- Florida
- Georgia
- Hawaii
- Idaho
- Illinois
- Indiana
- Iowa
- Kansas
- Kentucky
- Louisiana
- Maine
- Maryland
- Massachusetts
- Michigan
- Minnesota
- Mississippi
- Missouri
- Montana
- Nebraska
- Nevada
- New Hampshire
- New Jersey
- New Mexico
- New York
- North Carolina
- North Dakota
- Ohio
- Oklahoma
- Oregon
- Pennsylvania
- Rhode Island
- South Carolina
- South Dakota
- Tennessee
- Texas
- Utah
- Vermont
- Virginia
- Washington
- West Virginia
- Wisconsin
- Wyoming
Don’t let any of this scare you! It does look like a complicated process, but it is really rather simple when you have the right people to help you. If you aren’t comfortable registering and filing your business yourself, seek out a professional to help you. What is worse…
Usually, the paperwork for filing your company with the state is one to two pages.
These forms are pretty simple and straight forward, so don’t overthink it when you are filling these out. If you have any questions about a certain checkbox, or line, the state is usually pretty helpful in helping you better understand the form and what you should do.
As you know, I’m in the beautiful state of Oregon and I have registered about 5 companies here. (3 of them my own).
Let’s look at the Oregon LLC business registration form quickly to go over the different parts.
Oregon form << click to view
As you can see, everything is pretty straight forward and simple. However, there is one part that many people get stuck on when filling out forms for an LLC.
Do you see where it says...
"If this Limited Liability Company is NOT Member Managed, check one of the following boxes below".
For most cases, your LLC is probably going to be member managed. If you are the only owner of the LLC and you manage the operations of the LLC, your LLC is most likely member managed. If you have a partner or a more complicated management arrangement for your LLC (i.e.- You own the LLC but don't operate it day to day... etc.) you should consult with your CPA to find out if your LLC is Manager Managed.
My LLC is Member Managed. I am the only owner and am in charge of the operations of the business. Actually, I am the only employee of the LLC... I outsource all of the pain in the a$$ tasks to people and companies who do those tasks better than me.
Anyhow, scroll up to the state by state list above and click on your state to get the forms and instructions on how to file your paperwork. Usually there is a fee of between $30 and $75 to file, so get your credit card or check book out. Don't let this small fee stop you from filing NOW. If you won't committ enough to spend less than a hundred bucks on starting your business... YOU AREN'T COMMITtED ENOUGH TO SUCCEED!
I realize that I didn't go into heavy detail on filling out the forms, but it would be crazy to do all 50 state forms in a tutorial. If you are having problems filling out the form, first consult with the state, next with your CPA, and last with your attorney if necessary.
Go out and get that business registered. Once that's done, you have taken the first big step and committment to succeeding!
In part 3 we'll go over how to obtain your Employers Identification Number.
Good luck!
If you have any questions about any of this, please leave a comment or shoot us an email. We may even make a quick video tutorial to help you work through the stumbling blocks!
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Hey, my name is Trevor and I'm the founder of The REI Brain and a real estate investor since the age of 21. Right now, my focus in real estate investing is multi-family income properties and I have plans on moving more into the commercial real estate investment world in 2008 and beyond. 
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