Your Business Is Moving: Who Should Own the New Property?

If you own a business and are buying a building for the business to move into, you may be wondering whether your existing LLC should purchase the property or whether you should form a separate LLC.

In many cases, a separate LLC can make sense. In this structure, your existing company can continue to run the business, while a new LLC can own the building. The operating company would then lease the property from the real estate LLC.

Why do this? One important reason is to keep the business and real estate as separate assets. For example, if the business is sold, you may want to keep ownership of the property and lease it to the new owner. This structure can also help limit liability by creating two legally distinct companies.

However, there are several issues to consider. Your lender may have certain requirements that must be fulfilled. Additionally, having two companies means doubling the administrative burden. For example, you will need separate bank accounts and separate accounting records.

It is also important to make this decision prior to purchasing the property. Changing property ownership after the purchase can be more complicated and expensive.

Of course, every situation is different. Contact our office today to see how we can help.