Real estate · LLC guide · updated
How to start an LLC for a house flipping business
Flippers buy, renovate and sell fast, often with private or hard money loans, contractors and a buyer who relies on the work. Buyers who find hidden defects sue the seller. An LLC per flip, or one for the flipping business, holds the loans and the claims away from your home.
Our registered agent is optional: $74.25 a year, the same at renewal. Questions first? Ray or Vinny picks up at (954) 470-8356.
- EIN
- Hard money loan
- Builder's risk
- Contractor license
- EPA RRP
House Flipping Business businesses in the U.S.
Source: U.S. Census Bureau, County Business Patterns 2022 (NAICS 236117), the latest U.S. totals.
Why house flipping business owners form an LLC
Buyer defect claims
Undisclosed defects are the top lawsuit against flippers.
Hard money loans
Short loans with high rates and personal guarantees; know what you are signing.
Contractor injuries
Injuries at your property can reach the owner if contractors are uninsured.
An LLC keeps the company's debts and claims away from your personal assets when you run it as its own business: its own bank account, contracts signed in its name, and no mixing of money. It does not cover your own negligence, and lenders often ask for a personal guarantee. Insurance comes first.
Licenses and registrations for a house flipping business
Federal items link to the agency's own page. State and local rules vary, so pick your state at the top for your state's business portal. Tick items off as you go; the list remembers your progress on this device.
- We do thisForm the LLC and get its EINAlmost every registration above asks for the company's legal name and EIN, so this comes first. We file the LLC with your state for $123.75 plus the state fee, and can get the EIN for $41.25; the IRS also issues it free online.
Insurance and taxes to plan for
Insurance
- Builder's risk or vacant property
Standard homeowners policies do not cover vacant properties under renovation.
- General liability
Covers injuries at the site.
Taxes
- Dealer status
Flipped houses are usually inventory, not investments, so profit is ordinary income subject to self-employment tax, not capital gains. IRS / agency page
- S corporation election
Steady flippers often elect S corporation status to lower self-employment tax; a CPA can run it.
If you also hold rentals, keep them in a different LLC from your flipping business. Mixing them can expose the rentals to flip lawsuits and can make the IRS treat your rentals as dealer property too.
Forming the LLC itself: 7 steps in every state
- 1. Check the name
- 2. Name a registered agent
- 3. File with the state
- 4. Sign an operating agreement
- 5. Get an EIN
- 6. Open a bank account
- 7. Keep it in good standing
The filing office, fee and yearly report change by state. Open your state's step-by-step guide.
What it costs to form a house flipping business LLC
| Cost | File it yourself | With Vermilion Vitez |
|---|---|---|
| State filing fee (paid to the state) | $35 to $520 | $35 to $520 |
| Filing service, operating agreement included | $0 | $123.75 |
| EIN from the IRS | $0 | $0 yourself, or $41.25 if we get it |
| Registered agent, per year (optional) | $0 if you serve yourself | $74.25 |
State fees as charged at our checkout. Industry licenses, permits, bonds and insurance above are separate and set by each agency. Checkout shows the card processing fee before you pay.
Frequently asked questions
Should I form a new LLC for every flip?
Some flippers do, to isolate each project. Others use one LLC for the business. It depends on deal size, lender requirements and state fees.
Is house flipping profit capital gains?
Usually not. Regular flippers are treated as dealers, so profit is ordinary income and often subject to self-employment tax.
Do hard money lenders lend to new LLCs?
Yes, often, but they will look at your experience and credit and usually ask for a personal guarantee.
Do I need a contractor license to flip houses?
Not to own the house. If you do the renovation work yourself, or act as the general contractor, your state may require one.
How much does it cost to form an LLC for a house flipping business?
Your state's filing fee ($35 to $520 depending on the state) plus $123.75 if we file it, with the operating agreement included. Industry licenses, bonds and insurance are extra and set by each agency.
Is this page legal or tax advice for my house flipping business?
No. It summarizes public rules in general terms, with links to the agencies that set them. For your situation, talk to a licensed attorney or CPA, or book a free call with us.
Related industries
Ready when you are
Have us file your House Flipping Business LLC
$123.75 plus your state's filing fee, with the operating agreement included. Checkout shows the full total, card processing fee and all, before you pay.
Rather talk first? Call Ray or Vinny at (954) 470-8356.