Plano Real Estate LLC Attorney

 Posted on January 04, 2023 in Real Estate

Lawyer in Plano, Illinois Helping Real Estate Investors with LLCs

Gateville Law Firm assists real estate investors and property owners from limited liability companies (“LLCs”) in Plano, Illinois, and nearby areas. Setting up an LLC is an asset protection strategy to limit one’s liability concerning property and lawsuits that occur because of investment properties. A benefit of an LLC is limited liability protection. The owners of an LLC are called “members.” Members are the owners of an LLC.

An LLC is a strong tool to limit one’s liability concerns. In Illinois, there are two types of LLCs formed. The first type of LLC is a member-managed LLC. A member-managed LLC is when the members of the LLC manage the day-to-day operations of the LLC. Any member may bind the LLC into contractual obligations and assist in managing the day-to-day affairs of the LLC. 

In contrast, a manager-managed LLC is when the members appoint managers that manage the day-to-day operations of the LLC. The members appoint a manager or managers that make the day-to-day decisions of the LLC. The members do not necessarily have to assist in managing the daily operations of the LLC. 

A manager-managed LLC is a good entity to limit one’s liability such as real estate investors that do not seek to be active in the day-to-day events of the LLC. A manager-managed LLC can have similar benefits to a limited partnership because there is a business manager or managers that are responsible for the business management responsibilities. Even with manager-managed LLCs, members can be as active or inactive as they desire. For example, the LLC Operating Agreement will detail the roles of the manager(s) and member(s). A well-written LLC Operating Agreement is essential for multi-member LLCs. The members of a manager-managed LLC cannot bind the Plano, Illinois Real Estate LLC in contractual agreements. With a manager-managed LLC, the members still must draft an LLC resolution authorizing the sale or purchase of investment real estate. 

A Plano, Illinois Real Estate LLC Attorney assists real estate investors and property owners set up LLCs; draft LLC Operating Agreements; and coordinating real estate closings for real estate investors. One of the roles of a Plano Real Estate LLC Attorney is to draft a resolution and assist in setting up the business operations in a manner that is customized to the real estate investor’s desires. 

LLC Operating Agreement in Plano, Illinois

An LLC Operating Agreement is a written agreement, which explains the powers and responsibilities of the members and/or managers of the LLC. A Plano, Illinois Real Estate LLC Operating Agreement outlines the procedures and systems of the LLC. An Illinois is not mandatory for real estate investors or owners (and managers) of a Real Estate LLC, but it is strongly suggested. An LLC Operating Agreement and Resolutions of the LLC make managing real estate closings smooth and easy.

The LLC Management’s responsibilities and scope of power are detailed in the LLC Operating Agreement. One of the key paragraphs of an LLC is to detail the powers of the managers and the role of the members. The LLC Operating Agreement will state the powers of the manager(s) of the LLC, which are normally the following:

• Set up LLC bank accounts

• Manage the daily business operations

• Enter into contracts and agreements (with certain restrictions)

• Make vital financial decisions with certain constraints and limits

• Enter into loan agreements and obtain financing (if desired)

• Hire, supervise, and fire employees and independent contractors

• Work with the IRS and Illinois Department of Revenue in setting up accounts and tax identification numbers

It is important to know that the LLC Operating Agreement can be customized to the client. Each client desires similar (but possibly) different responsibilities from their Plano, Illinois Real Estate LLC Lawyer. LLC Operating Agreements will often limit the manager’s ability to sell or assign substantially all the Real Estate LLC’s assets.

Additionally, the LLC Operating Agreement should address the following issues:

• Describe whether the LLC is a member or manager-managed LLC

• Describe the percentage of membership interest and how new members are added to the LLC

• Explain when distributions can be made and in what manner (such as to pay taxes)

• How the LLC members and managers will oversee the dissolution of the LLC

• Explain member and manager rights concerning withdrawal from the LLC

• Merger and sale of substantially all the LLC’s assets

Plano, Illinois Real Estate Tax Planning Attorney: Tax Planning for Your LLC

In Illinois, LLCs have the option of being taxed as corporations, sole proprietorships, and partnerships. Unlike most real estate and business attorneys, Gateville Law Firm has a strong tax planning background, which assists our real estate clients and investors with their business and real estate transactions. In Illinois, LLCs have a different default or assumed requirements, which are used for tax treatment. Single-member LLCs are considered sole proprietorships. The single-member LLC provides limited liability protection, but for tax purposes is considered a “sole proprietor.” The Single-Member LLC has no business taxes, but a profit and loss statement or Form 1040 or 1040-SR Schedule C, Profit or Loss from Business (Sole Proprietorship). In summary, the single-member LLC is “disregarded” for tax purposes meaning that a single-member LLC will file its profits and losses on its federal tax return.

Tax planning involves advanced planning where the real estate investor can pick the best tax classification for their tax situation. Single Member-LLCs and multi-member LLCs may be taxed as corporations or partnerships as well. Small real estate investors often desire to be taxed as an “S corporation.” S-corporation election involves electing to be taxed as an S-corporation instead of a “sole proprietor” or “partnership.” The default tax classification for multi-member LLCs is “partnerships.” Real estate investors and entities often elect partnership tax treatment because they limit self-employment taxes. A customized evaluation by a business attorney and account is critical to determine the best tax classification for your business. A consultation with a Plano, Illinois Real Estate LLC Lawyer can assist you to make the correct decisions.

Contact a Plano, Illinois Real Estate Lawyer for Your Business and Real Estate Needs in Kendall County and Nearby Areas

Gateville Law Firm has attorneys and support staff experienced in real estate transactions, limited liability companies, and business transactions. Our real estate team has more than 50 years of experience ranging from title insurance, real estate closings, and underwriting experience for LLCs and business entities. Fill out our online form or contact us at 630-864-5788 to set up a consultation to discuss your real estate, business, and LLC legal needs.

Sources

https://www.forbes.com/busienss/how-to-set-up-llc-in-Illinois

https://www.upcounsel.com/illinois-llc-operating-agreement

https://www.irs.gov/businesses-self-employed/single-member-limited-liability-companies