There are various types of rental properties in Wisconsin. Property owners and investors may have rental units available for short- or long-term residences or commercial uses. Property owners wonder whether they will need to have a specific type of corporation in order to legally offer rentals in Wisconsin. A knowledgeable attorney will help answer your questions and help with any legal matters.
What is an LLC?
A Limited Liability Company, LLC, is a type of business structure that is primarily used for privately held companies. An LLC keeps business assets and debts separate from personal assets. This type of structure provides some important protections for owners and investors. Primarily, it protects owners from personal liability for company debts. It is an entity that includes some of the features of a sole proprietorship or partnership with those of a corporation. The LLC is often a preferred business structure for those who own rental property in Wisconsin or elsewhere.
Do I Need an LLC for Rental Property in Wisconsin?
Wisconsin law does not require you to have an LLC structure to rent property. However, it may be a good idea to use this type of business entity rather than operating as a sole proprietorship or as a partnership. If you purchase a rental property, you will want to consider transferring it into an LLC. If you have multiple rental properties, it may be wise to have a separate LLC for each one or create an LLC for specific groups of properties.
Do I Need an LLC If I Have Insurance?
Property owners may wonder whether having an insurance policy is enough to shelter them from harm. While an insurance policy is helpful, it alone may not be enough to protect you and your personal property. In some cases, the insurance company may deny a claim, leaving you liable for it on your own. Sometimes a claim may exceed the limits of your insurance policy. It can be expensive to increase your coverage, and even then, it may not be enough to cover your needs. An LLC is written to protect you as much as possible.
Benefits of an LLC
Limited Liability Companies offer some important benefits over sole proprietorships or partnerships. An LLC is generally easier to create than a corporation. There are specific rules you must follow when creating an LLC in Wisconsin. Besides offering liability protection for owners and investors, LLCs have some tax benefits. In addition, some expenses may be deductible for the business. An LLC member may manage the daily operations, or the LLC may opt to hire a manager. Record keeping is less complex than with a corporation. An LLC may also have some disadvantages, primarily when a member dies. Therefore, you should make sure that you cover all your bases when choosing an LLC structure before putting it in place.
Having a rental property can be less risky when you utilize an LLC. To learn more about LLCs and to speak to someone from our legal team, contact us at Moen Sheehan Meyer, Ltd. at (608) 784-8310 or online today.