Three advantages of establishing an LLC as a real estate investor

If you want to make more money in Colorado, investing in real estate is a great potential way to achieve this goal. But, before you start investing, you’ll need to establish a corporate structure. With so many options to consider, determining what kind of structure to establish can get confusing. Considering that, here are a few reasons why starting a real estate investment LLC is such a great idea.

Lowering your tax rates

One of the biggest concerns that arise during the business planning process has to do with taxes. If you’re looking for a way to lower your tax rates, it could be wise to form an LLC. Instead of direct taxation, the owner of an LLC can report either losses or profits on their personal tax returns. Because of this, forming an LLC might give you the lower tax rates you’re after.

Protecting your personal assets

Most business owners have personal and company assets. With that in mind, you might not want these two types of assets to get combined. Fortunately, as an LLC, you won’t have to worry about this problem. After forming an LLC, you can rest assured you’re not personally liable for any business-related debts or lawsuits.

Building credit

After you structure your business as a real estate LLC, you’re able to get an Employer Identification Number. After you have your EIN, you can start establishing a line of credit for your new company. As an investor, having business credit can increase your borrowing power. Best of all, the business credit you’re building won’t impact your personal credit.

As you can see, forming an LLC can provide you several major advantages. With an LLC, you should have an easy way to start building credit. Plus, forming an LLC helps protect your personal assets, and it can potentially lower your tax rates. If you need help forming your new company, it might be beneficial to speak with a business planning attorney.