Can You Wholesale Houses Without a Limited Liability Company (LLC)?

Yes, you can wholesale houses without a limited liability company (LLC). However, it is advisable to create an LLC and then wholesale houses. Many wholesalers, unfortunately, make the critical mistake of not creating or procrastinating on setting up an LLC. This often kills their potential returns and exposes them to a variety of risks along with increased costs.

LLC — What is it and the Benefits it Offers to Wholesalers?

Also known as a holding company, an LLC (Limited Liability Company) is a legal entity. This entity is designed to protect property owners from the risks that are associated with contracting and owning investment properties. The purpose of this structure is to prevent wholesalers from being personally responsible for debts and other liabilities.

Other benefits include the following:

  • LLCs are used as a tool to lower one’s personal exposure to both legal and monetary risks
  • Help wholesalers enjoy significant tax benefits
  • Enjoy privacy
  • Discourage malicious and frivolous lawsuits Provide liability protection
  • Increase net profits
  • Reduce tax liability and more

Step-by-Step - Real Estate Wholesaling

Why Do Wholesalers Delay Setting Up An LLC?

One of the top reasons why wholesalers/ investors delay setting up an LLC is that they perceive it to be expensive. Besides this, they also think that it is time-consuming and complicated to set up an LLC. However, that’s not true. In most cases, you can establish an LLC in less than half hours online and for less than a few hundred dollars.

Also, new wholesalers/investors can get started and then adjust their details later as their business and profits grow. Furthermore, if you have plans to start with wholesaling and then fix and flip homes, then set up an LLC. This will truly help you grow your business by sheltering your taxes and protecting assets. In fact, investors may be able to keep more of the money they make when the time comes to file their taxes.

How Much Does it Cost to Set Up An LLC?

If you’re wondering about the cost of setting up an LLC then let us tell you that it isn’t expensive. It is contingent on the state it is filed in. The filing fee may vary from state to state. It can range anywhere between $50 and $500. Apart from the filing fee, additional fees may be required for a federal tax ID number. The money you spend on setting up an LLC is worth it, especially with all the benefits it has to offer.

Thus, if you’re planning to work as a full-time wholesaler and become a real estate investor, then consider an LLC creation. Create a Limited Liability Company today for a few hundred dollars and enjoy amazing benefits over the years. It’s a win-win.

Back to Wholesaling Houses | NEXT: Can You Wholesale Houses That Have Liens?

Did you find this useful? If so please share and comment!