joshua4012Participant@joshua4012Join Date: 2013Post Count: 3
I saw some questions in relation to this. I would like to say that it is still possible and pretty easy to get these set up fairly quickly. You will need to get an entity set up and an EIN (employer identification number) issued. To set up an LLC, it can take about two to five days if you need expedited services. Once the articles of organization has been accepted and filed with the state you can get an EIN issued by the IRS which you will need in order to get the bank account. It is becoming more difficult to set up bank accounts remotely. Chase have closed out some accounts for our clients but we have been dealing with Wellsfargo. I have seen some companies charging $3000 to set up LLC and bank accounts???? The cost for these services should not exceed $1000, depending on the state filed.
JoshjayhinrichsParticipant@jayhinrichsJoin Date: 2011Post Count: 1,177
agreed on the costs to set up vanilla LLC's 1k max wells fargo has been closing accounts as well. We had quite of few of our borrowers get their accounts closed on them in the last 6 months and it is a royal pain.. we have them all set up on electronic transfers to pay their payments to us only to have to go through the exercise all over again.streamlineinvestingParticipant@streamlineinvestingJoin Date: 2010Post Count: 171
Only cost be about $300 to set up both of my LLC ($600 total), may have gone the budget version but they still do what I need to do so cannot complain.
As for US Bank Accounts I have had a lot of bad luck, I was able to get a bank account set up with BB&T Bank remotely (without even visiting the country) but they closed the account about a week later. Then when I was in the US I had an account set up with Wells Fargo over there and all seemed to go well, but they were subsequently closed about two weeks later (never even got a reason). Now we have an account opened with Capital Bank (been opened since the start of the year) and that seems to be going alright so far, but we have formed a partnership with someone who lives in the US so hopefully they can manage it if anything occurs.EngeloRumoraParticipant@engelorumoraJoin Date: 2010Post Count: 618
We work with a few attorneys that will set up an LLC or Corporation for $1,000 and also be the registered agent.
Wells Fargo caused a lot of problems for many turn key companies and also hard money lenders that foreign investors borrowed from to purchase when they decided to close accounts.
Thanks and have a great day.
Wells Fargo at one stage was the pin up boy as far banks go for opening accounts for non present overseas buyers, and like I'm sure many others, I had some very good contacts at that bank who were opening accounts for clients without any hassles. However, the problem always seems to be that you deal with an employee at a bank, the employee sooner or later leaves, no one can or is willing to take it on, and then the bank closes the account anyway.
With many clients having had their account closed, with being a non present account holder when it was opened, it seems that most banks are now really clamping down, and many are also getting a cheque ( Check ) back for the balance, I have had clients who opened account through relatives in the US, and who looked after the account, but after a while it was still closed down.
So this became a real problem in supplying this service, sure there are still those that are able open accounts, but for how long before it does get closed, and then back to looking again.
Over the past four months, I have been working with one of my associates who is a Property Lawyer and a partner in one of my major supply companies, his family actually own a major local bank, that they also do business with and have done for many years, and after the past many months working it out with the actual CEO, VP and Legal Council of the bank, accounts have now been opened successfully, one for an overseas client in Europe himself a lawyer, so it is now very legal and secure. <moderator: delete advertising>
But If an account is definitely required, as many times its not, then this is probably unique in that your not dealing with an employee who leaves and your account gets closed.
As for opening the LLC etc, many sources have different rates, and what professional advice if any is included. You can get an LLC and Ein for a few hundred dollars if going direct to a source in the US, or up to a few thousand dollars through some companies here in Australia. Many don't realize that the LLC can be taxed differently and you have to take in asset protection, in many states a single member LLC can be sued very easily, and if the wrong structure is set up, you can be in all sorts of trouble over time.
The price of the actual LLC etc, is also only part of the process, as many times have i seen someone had this all set up on the advice of some salesperson at a company, only to find that they were given the wrong advice and it was set up all wrong for their needs or circumstances, or even in the wrong State for their needs.
So getting the correct advice right at the start is so important, don't go with the herd mentality because someone says what they did and saved a lot of money, that's very dangerous. And the right structure should be in place even before looking at properties, if you know where you want to buy, or at least at the same time, certainly not after purchasing.
That's my few words, for what it's worth.missybellaleeMember@missybellaleeJoin Date: 2010Post Count: 2
We are in the process of setting up our bank accounts in US. The advice we have received is to use HSBC Premier. Is this a good way to go? I am aware that they have a minimum balance to open the account, but what we see as a plus is we can go to our local branch here in Oz and have our personal banker liaise for us if necessary. Opinions please.joshua4012Participant@joshua4012Join Date: 2013Post Count: 3
I agree with Engelo. You want to keep all transactions relating to the property in the LLC from an asset protection standpoint. Do you have an EIN number for the LLC? If so you can easily get a business account set up within a week. It will only cost about $200. A property manager can pay rent to a personal account but it will defeat the purpose of having set up the LLC for asset protection and cause more complications when it comes to accounting and tax returns. I would suggest you make the effort to get a business account to go with the LLC.EngeloRumoraParticipant@engelorumoraJoin Date: 2010Post Count: 618
With HSBC you will only be able to open up a personal account and if you purchase property in the US through an LLC the property manager will only be able to mail a check with your personal name on it and not the LLC's name.
It would be easier to break through the security of the LLC in case of a lawsuit if the rent collected is going into your personal account.
This has been my understanding and advice I received from our attorney.
ThanksmissybellaleeMember@missybellaleeJoin Date: 2010Post Count: 2
.Thanks for the comments, we havent got as far as setting up an LLC but these are all valid points to consider.
As Engelo, says, it would be with a personal account, I've tried a few times in the past with HSBC, and found a few issues i didn't like for opening bank accounts for clients, so never went any further with them.
As buying an investment property and receiving rents is a business, then you would need a business account from the start, and have it opened in the LLC name, of course that also means having the LLC set up properly for your own circumstances, and always remember when setting up your business structure in the US, no one shoe fits every size, I know and hear about tax issues quite often, that have happened due to not getting the correct professional ( and independent ) advice at the start, so get that done first.
You will need the LLC to open the Business Account, and you will get a debit card to use at any ATM, plus a book of cheques ( Checks ) which really, your property Manager should have in order to pay bills etc for you, that's another issue to discuss.
Mainly it's been that bank accounts being opened are personal ones, then later on a business one, possibly…!! I have actually two very good and very solid sources ( one with the actual bank not an employee ) that can and are opening Business Accounts for my clients both in Australia and Overseas, with their LLC though, and having your Tax File Number.
Be glad to help.Ben GrayParticipant@ben-grayJoin Date: 2013Post Count: 10
My advice to you, and everyone, considering getting an LLC is to focus on value not cost. Strive to understand why the "same LLC" can cost more or less depending on the protection it affords – or work with someone who can explain this to you in a way you understand and feel comfortable with. Saving a few hundred, or a few thousand, on the front end can cost you hundreds of thousands on the back end.
Why not call a few companies and ask the same tough questions? Everyone will be happy to talk to youRiky HidajatParticipant@ricksydJoin Date: 2014Post Count: 6
I used to setting up a bank account with Wachovia via online application by myself without virtually any setup cost about 5 years ago. I registered a US Delaware corp company and made an online inquire through the bank. Someone followed up on me and I was able to manage by account through online banking. When I searched through internet, Wachovia has been bought up by Wells Fargo. So I don’t know whether Wells Fargo able to do it or not.
There are some important area of setting up an LLC which have been overlooked in this discussion but need to be considered.
1. What state are you going to set your LLC up in? Most states tax, except for Nevada and Delaware
2. If you have property in several different states and all within one LLC, the LLC is considered a “Foreign Entity” in all states bar the state of registration. You have to apply for and comply with “Foreign Entity” registration in all states in which you own property bar the state of registration.
3. How is your LLC going to trade, as a corporation, as a partnership etc? If as a partnership you have to have not only and EIN but also ITINs for each member, getting these takes time. We forced the IRS’s hand to get ours as they were taking so long… we sent in tax returns, then they had to issue ITINs
4. You are going to need a US mailing address. Your CPA might be a possible solution for this, particularly if they are not a big company.
No it’s not as simple as a few people have made out, my best suggestion is; get a good CPA in the state you are going to set up your LLC, you going to need one anyway, and they can advise you on the best way to go.
It took us about a year to get all the ducks lined up properly, including the bank account. Yep we also went through the Wells Fargo fiasco but still haven’t got the right bank as ours is only east coast and we need one that and cover all states with shop front banking.
If your working out of an Australian Trust, like a Family Trust, expect tings to get even more difficult!
- This reply was modified 5 years, 4 months ago by HuMungus.
This is incorrect, all corporations have to pay income tax in Florida. I am not going to go into details but if you check this link to Florida Dept of Revenue, you will discover all the details: http://dor.myflorida.com/dor/taxes/corporate.html
Currently to my knowledge the only states that are tax free are Nevada and Delaware
I’m going to check this with my Accountant and will post his comments. I know I don’t pay State tax for any of my businesses. Might be something to do with having a Corporation as owner or one of the members of the LLC. My lLCs have a family trust as managing member.
I spoke with my Accountant today and he advises:
A single member LLC disregarded for Florida and federal income tax purposes is not required to file a separate Florida corporate income tax return.
For any complicated set up in any State I am sure it would be prudent to discuss your personal needs with a US Accountant first but there are lots of ways to make the whole thing work.
Thanks for posting HuMungus, food for thought!
Yep, that’s pretty much what one of the paragraphs on the web page stated.
Tax differences between states is complex, so one must be circumspect as to how one expresses oneself, blanket statements which can mislead people are not well advised.
This forum is read by many and they have varying degrees of experience, so as far as I am concerned we are duty bound to provide information that is as accurate as possible. From there it is up to the individual to do their own due diligence.
It took us over a year to get our US structure set up correctly and even now there are elements we need to improve, primarily banking.
It is all dependent on where you are operating and what you are doing; buying to rent, flip, liens or deeds. All have have factors that must be considered when establishing you business structure in the US.RedwoodParticipant@redwoodJoin Date: 2013Post Count: 340
Thanks for your input – greatly appreciated. Who did you use to set up your LLC or did you do it yourself?
We do alot of SMSF investments in the US and the LLC is especially important for Compliance as well as US tax considerations. We have a legal firm in the states to set it up and the process for SMSF Compliance is different depending on whether the property is a cash purchase or finance as compared to Non-smsf purchases. Again, consideration of local laws and taxes is important also and finding a good CPA is a problem.
In terms of opening bank accounts, we have found this extremely easy without the client being there in person (my preference is that they are there in person), however, for SMSFs the account should be with an ADI which limits your options. Otherwise you can use a FX provider to wire your rent back if permitted which reduces the risk of non-compliance however FX fees will add up over time.
I think where some people get a bit confused is the difference between paying personal tax and state tax, but in all cases, as the tax rule scan be very involved and complex, even sometimes the IRS can get it wrong, so yes, the best advice no matter where your buying, is to get a very good US CPA on side, and get things set up properly. Don’t mess around with this if your not qualified or trained.
And again, getting the correct LLC or whatever set up is right for your own circumstances is also imperative, as no one way fits all shoes, there are tax implications and an LLC can be set up in different ways to meet these needs as well as for asset protection. in many states, a single member LLC offers no protection at al, and in others, it offers very strong protection, all very legal, so you have to get the correct advice from day one.
As for opening bank accounts, it’s getting easier, and there is no problems getting overseas investors set up without going over there. And getting a business check account straight away is also pretty easy, as have had this set up for clients without any hassles. Not touching the big named banks, Wachovia has been part of Wells Fargo a long time now, and they were closing accounts for overseas investors going back a few years ago, even sending checks ( cheques) back to customers back in Oz.
Having trustworthy reliable people on the ground as a team, is essential, but takes time to develop and build that important rapport. But once you have that, it certainly makes everything so much easier.
Thanks for reading this.
Us Property Purchase.