Some of my new clients had previously created an LLC, but they continued to do all of their LLC banking through their personal or DBA account. All income provided by the LLC must be deposited into the LLC account, and all LLC expenses must be paid from the LLC account. In the case of a lawsuit, a judge will invalidate the LLC for failing to hold LLC funds separate from personal funds, allowing creditors to threaten and seize your personal properties. Tenants must make their rent checks payable to the LLC and deposit them in the LLC’s bank account. Check out the post right here Elite Finishing LLC
All LLC costs must be paid from the LLC account, including but not limited to mortgage payments, insurance, taxes, and maintenance. In an emergency, you might be able to cover an LLC bill with personal funds and then write an LLC check to reimburse yourself. This, however, should be held to a bare minimum. Your LLC should also have a credit/debit card in order to make minor payments for the house. If you hire a management company or a leasing agent to receive rent on your behalf, the agency would send the rental income to the LLC rather than to you.
Forming a company rather than an LLC for your rental property is mistake #4. Many people make the mistake of forming a company for their rental property in an effort to save money but without sufficient legal guidance. This is a bad idea because, for this form of company, a corporation usually does not have as much asset security as an LLC. Corporations now have more tax disclosure requirements, as well as extra formalities like required meetings and corporate minutes. Even if you later decide to be taxed as a corporation, you can elect to have your LLC treated as a S or C-Corporation by filing the requisite forms with the IRS