Real estate · LLC guide · updated
How to start an LLC for a property management company
Property managers collect other people's rent, hold security deposits, hire vendors and make decisions owners and tenants can both sue over. Most states treat managing for others as real estate brokerage. An LLC holds the license, the trust accounts and the management agreements.
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
- Broker license
- Trust account
- E&O insurance
- Management agreements
Property Management Company businesses in the U.S.
Source: U.S. Census Bureau, County Business Patterns 2022 (NAICS 531311) and U.S. Census Bureau, Nonemployer Statistics 2022 (NAICS 5313), the latest U.S. totals.
Why property management company owners form an LLC
Trust account mistakes
Mixing tenant deposits with operating money is a leading cause of license discipline.
Fair housing
Managers make screening and accommodation decisions covered by fair housing law.
Vendor work
If a vendor you hired causes damage, owners and tenants may sue you.
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 property management company
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
- Errors and omissions
Covers claims from owners about how you managed the property.
- General liability
Covers injuries at your office and some site claims.
- Fidelity or crime coverage
Protects against employee theft of trust funds.
Taxes
- Management fees are your income
Rent you collect belongs to the owners; only your fees are revenue. Keep the books that way.
- Backup withholding and W-9s
Collect W-9s from every owner and vendor.
In many states the brokerage entity needs its own license and a designated broker. Make sure the LLC that signs management agreements is the licensed entity.
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 property management company 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
Do I need a real estate license to manage rentals?
In most states, yes, to manage properties you do not own for pay. Some states have a separate property management license.
Can I manage my own rentals without a license?
Generally yes. Licensing applies when you manage for others.
How should a property management LLC handle deposits?
In a separate trust account, never mixed with operating funds, following your state's record rules.
What insurance does a property manager need?
Errors and omissions, general liability, and coverage for employee theft of client funds.
How much does it cost to form an LLC for a property management company?
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 property management company?
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.
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Ready when you are
Have us file your Property Management Company 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.