Why Compliance Matters for Your Real Estate LLC
Staying compliant as a real estate LLC is essential to protecting both your business and your personal assets. Properly separating the company from its owners preserves the limited liability protections an LLC provides and reduces the risk of piercing the corporate veil. In simple terms, you can’t just create an LLC and forget about it — ongoing compliance is critical. Piercing the corporate veil occurs when a court removes the legal separation between the LLC and its owners, making the owners personally liable for the company’s debts, obligations, and potential lawsuit losses. This most often happens when business and personal finances are mixed, records are poorly maintained, or compliance requirements are ignored. By following formal procedures and keeping accurate records, you safeguard the business, build credibility, and protect the long-term benefits and liability protections your LLC was designed to provide.
This checklist outlines the steps needed to stay compliant, protect your liability, and prevent piercing the corporate veil.
1. Entity & Formation Documents
- Maintain Articles of Organization and any amendments on file.
- Keep the Operating Agreement updated (ownership, decision-making, distributions).
- Secure your EIN confirmation and any relevant state or federal registrations.
2. Financial Separation
- Use a dedicated LLC bank account for all income and expenses.
- Maintain separate credit cards for business expenses.
- Never co-mingle personal and business funds.
- Document all owner contributions and distributions properly.
3. State & Local Compliance
- File the Annual Registration with the Georgia Secretary of State before April 1 each year.
- Renew any required business licenses or local occupancy permits.
- Keep your registered agent information up to date.
4. Contracts & Signatures
- Always sign documents in the LLC’s name: 'Atlanta Marietta Inc., by Kathy Pecora, Managing Broker.'
- Avoid signing personal guarantees unless absolutely necessary.
- Use standardized contracts for leases, management agreements, and vendor relationships.
5. Insurance & Risk Management
- Maintain adequate general liability, property, and E&O insurance.
- Update coverage annually to reflect portfolio growth and changing risk exposure.
- Require vendors and contractors to provide proof of liability insurance and W-9s.
6. Record-Keeping
- Keep accurate financial statements, owner distributions, and tax records.
- Store all leases, management agreements, and amendments securely.
- Retain meeting notes or key decisions — even for single-member LLCs — to demonstrate formalities.
7. Tax Compliance
- File federal, state, and local taxes on time.
- Issue 1099s to contractors and vendors by January 31 each year.
- Maintain proper documentation for property taxes and ensure payments are current.
8. Capitalization & Operating Reserves
- Maintain adequate reserves for repairs, vacancies, and emergencies.
- Document any capital contributions made by owners.
9. Best Practices
- Avoid using LLC accounts for personal expenses — ever.
- Use consistent branding, signage, and communications under the LLC name.
- Review this checklist quarterly to ensure ongoing compliance.
10. Notes & Reminders
- Annual registration is due by April 1.
- Keep all compliance documents in a central, secure digital folder.
- Schedule an annual internal audit to confirm separation of finances and entity formalities.
Staying compliant as a real estate LLC is essential to protecting your business, safeguarding your personal assets, and maintaining the liability protections your LLC was designed to provide. By following the steps in this checklist, you can reduce risks, build credibility, and ensure long-term success. If you have questions about compliance or need expert guidance on managing your properties, call Kathy at Atlanta Marietta Inc. today at (770) 906-3622 — we’re here to help you protect your investments or can refer you to the attorney we use!
