Congratulations. You have a legal entity for your real estate business. But what do you do to maintain it properly so that in the event of a legal issue, you’ve got a reasonable shot at some protection! You cannot “set it up and forget it” or you’ll find the very moment you really need it, it’s not functioning properly for you. During litigation.
Remember to consult with your attorney about this, and here are 4 practical tips.
1. Have the commission funds deposited into a bank account in the name of the business. Or, if the funds go into a personal account, immediately move the exact same amount of the deposit into your business account and pay all business expenses through that account or a dedicated credit card.
2. Keep your entity in good standing with the state by paying all taxes, filing the annual form and paying the fee with the state, and having regular (quarterly at most) meetings of the shareholders (you) that are documented in a corporate minutes book. You can document this yourself or a paralegal can create a minutes book for you for this purpose. It seems completely performative when you are the owner of the LLC without other investors, but that's the game. Document big decisions - structural changes (moving brokerages, for example), hiring, firing, or big expenditures or loans.
3. Obtain a business general liability policy.
4. Don't keep too much cash in the name of the business. Any more than 3 months of business expenses is probably too much.