--- title: What Real Estate Investors Should Know About Different LLCs in California description: Many real estate investors form their own limited liability corporation (LLC,) limited liability partnership (LLP,) and some consider forming a general partnership. It is worth knowing the differences, so you make the decisions that are right for you, your business, and your business partners. image: https://www.trustdeedcapital.com/hubfs/Stock%20images/Close%20up%20image%20of%20businesswoman%20hands%20signing%20documents.jpeg --- [![Trust Deed Capital](https://www.trustdeedcapital.com/hs-fs/file-16494019-png/images/trust-deed-capital-logo.png "Trust Deed Capital")](https://www.trustdeedcapital.com/) CALL 1 (888) 563-5588 Search ![Hard Money Lender Investors](https://www.trustdeedcapital.com/hs-fs/images/blog.png) ## [What Real Estate Investors Should Know About Different LLCs in California](https://www.trustdeedcapital.com/blog/what-real-estate-investors-should-know-about-different-llcs-in-california) Posted by [Ken Meyer](https://www.trustdeedcapital.com/blog/author/ken-meyer) on Tue, Jan 29, 2019 - [Tweet](https://twitter.com/share) ![Man signing the paperwork to form a LLC](https://www.trustdeedcapital.com/hs-fs/hubfs/Stock%20images/Close%20up%20image%20of%20businesswoman%20hands%20signing%20documents.jpeg?width=300&name=Close%20up%20image%20of%20businesswoman%20hands%20signing%20documents.jpeg)Many real estate [investors](https://www.trustdeedcapital.com/blog/bid/149173/How-to-Succeed-as-a-Real-Estate-Investor) form their own limited liability corporation (LLC,) limited liability partnership (LLP,) and some consider forming a general partnership. It is worth knowing the differences, so you make the decisions that are right for you, your business, and your business partners. Different business entities impact both California State and Federal tax liability and other matters. They also affect how individuals who are involved in the business are viewed by California and federal law. ## Corporation Basics A [California](https://www.trustdeedcapital.com/blog/3-compelling-reasons-to-invest-in-california-real-estate) corporation is a legal entity which exists separately from its owners. It, therefore, continues to exist after owners cease their personal ownership. This separation limits owner liabilities to the amount invested in the corporation. Taxes are levied on both the corporation and the stockholders. Individuals who form a corporation must file Articles of Incorporation with California's Secretary of State. ## Limited Liability Company (LLC) An LLC limits its owner’s liability at a personal level from being pursued to settle corporate debts or to personally meet judgments made against the LLC unless personal and company funds are co-mingled or if a member agrees to underwrite company debt. Apart from limiting personal liability, being an LLC stockholder means that company tax losses can be reported on a personal tax return to reduce some personal tax liabilities. ## Company Name The company must have a business name (including either "Limited Liability Company," "LLC," or "L.L.C.") The name should be unique and should not be a look-alike of an existing company name. This is to avoid confusion in the general public about its ownership or purpose. The name may not include certain words; bank, insurance company are two simple examples. ## Operating Agreement An LLC must produce an Operating Agreement. The agreement is, in effect, a contract between the owners which states: - Why the business exists - Its purpose - How it will be run and managed - How operating profits and losses will be handled - How any new members will be added? ## Record Keeping California law requires that appropriate records are maintained. These include: - A copy of the Articles of Organization, Operating Agreement, and member names - Accounting, tax, and member contribution records - Six years of financial statements ## Limited Partnership (LP) An LP offers some limited liability for some partners. An LP must have at least one general partner who controls the running of the partnership business, and at least one limited partner whose personal liability is determined by the amount of involvement or participation they have in the business. The general partner's personal liability is unlimited as far as meeting partnership debts or other obligations. ## General Partnership (GP) A GP must have at least two partners, all of whom share unlimited liability for business debts and obligations. Profits are taxed as personal income. ## Limited Liability Partnership (LLP) From a real estate point of view, an LLP would only be appropriate if it focuses on land surveying. LLPs must maintain certain levels of insurance to satisfy California law. ## Summary Point Real estate investors who decide to form a business entity may be best advised to create a Limited Liability Company for maximum personal liability protection. Please take legal advice before forming an LLC, and please don’t hesitate to [contact us](https://www.trustdeedcapital.com/contact-us) to discuss your borrowing needs.   [![New Call-to-action](https://hubspot-no-cache-na2-prod.s3.amazonaws.com/cta/default/115318/bdb27265-4231-47ad-a80d-eba96d3c6979.png)](https://hubspot-cta-redirect-na2-prod.s3.amazonaws.com/cta/redirect/115318/bdb27265-4231-47ad-a80d-eba96d3c6979)[![Do I Qualify for a Hard Money Loan?](https://hubspot-no-cache-na2-prod.s3.amazonaws.com/cta/default/115318/825238e7-1ebf-4e9a-960f-50d93dc08439.png)](https://hubspot-cta-redirect-na2-prod.s3.amazonaws.com/cta/redirect/115318/825238e7-1ebf-4e9a-960f-50d93dc08439) ### Have Questions? [![New Call-to-Action](https://hubspot-no-cache-na2-prod.s3.amazonaws.com/cta/default/115318/cf54edd7-d8f4-4871-aafd-a8cc5b76667e.png)](https://hubspot-cta-redirect-na2-prod.s3.amazonaws.com/cta/redirect/115318/cf54edd7-d8f4-4871-aafd-a8cc5b76667e) ### Subscribe via E-mail ### Connect With Us [![New Call-to-action](https://hubspot-no-cache-na2-prod.s3.amazonaws.com/cta/default/115318/0427129d-319c-4434-b1fc-8288f0a96fdf.png)](https://hubspot-cta-redirect-na2-prod.s3.amazonaws.com/cta/redirect/115318/0427129d-319c-4434-b1fc-8288f0a96fdf) [![Click me](https://hubspot-no-cache-na2-prod.s3.amazonaws.com/cta/default/115318/9b675c39-e065-48bd-9be4-27a27260541f.png)](https://hubspot-cta-redirect-na2-prod.s3.amazonaws.com/cta/redirect/115318/9b675c39-e065-48bd-9be4-27a27260541f) [![Click me](https://hubspot-no-cache-na2-prod.s3.amazonaws.com/cta/default/115318/768f75b8-2827-4c95-9d49-6cdf67e0fa5c.png)](https://hubspot-cta-redirect-na2-prod.s3.amazonaws.com/cta/redirect/115318/768f75b8-2827-4c95-9d49-6cdf67e0fa5c) ### Latest Posts ### Categories - [fix and flip (95)](https://www.trustdeedcapital.com/blog/topic/fix-and-flip) - [fix and flip real estate investments (43)](https://www.trustdeedcapital.com/blog/topic/fix-and-flip-real-estate-investments) - [fix rehab properties (42)](https://www.trustdeedcapital.com/blog/topic/fix-rehab-properties) - [real estate investing (38)](https://www.trustdeedcapital.com/blog/topic/real-estate-investing) - [fix and flip loans (34)](https://www.trustdeedcapital.com/blog/topic/fix-and-flip-loans) - [Smart Investing (29)](https://www.trustdeedcapital.com/blog/topic/smart-investing) - [hard money lenders (29)](https://www.trustdeedcapital.com/blog/topic/hard-money-lenders) - [hard money loans (27)](https://www.trustdeedcapital.com/blog/topic/hard-money-loans) - [real estate investors (24)](https://www.trustdeedcapital.com/blog/topic/real-estate-investors) - [buying investment property (23)](https://www.trustdeedcapital.com/blog/topic/buying-investment-property) - [real estate investments (23)](https://www.trustdeedcapital.com/blog/topic/real-estate-investments) - [real estate investor (23)](https://www.trustdeedcapital.com/blog/topic/real-estate-investor) - [Fix and Flip Education (22)](https://www.trustdeedcapital.com/blog/topic/fix-and-flip-education) - [Renting Strategy (20)](https://www.trustdeedcapital.com/blog/topic/renting-strategy) - [investment property (20)](https://www.trustdeedcapital.com/blog/topic/investment-property) - [real estate market (19)](https://www.trustdeedcapital.com/blog/topic/real-estate-market) - [hard money (17)](https://www.trustdeedcapital.com/blog/topic/hard-money) - [Rental Property (16)](https://www.trustdeedcapital.com/blog/topic/rental-property) - [borrowers (16)](https://www.trustdeedcapital.com/blog/topic/borrowers) - [hard money lender (16)](https://www.trustdeedcapital.com/blog/topic/hard-money-lender) - [Investors](https://www.trustdeedcapital.com/understanding-trust-deeds/) - [Understanding Trust Deeds](https://www.trustdeedcapital.com/understanding-trust-deeds) - [Our Business Standards](https://www.trustdeedcapital.com/our-business-standards) - [Yield Comparisons](https://www.trustdeedcapital.com/yield-comparisons) - [The Process](https://www.trustdeedcapital.com/investor-process) - [Available Trust Deeds](https://www.trustdeedcapital.com/trust-deeds-available) - [Investor FAQs](https://www.trustdeedcapital.com/investor-faqs) - [Investor Testimonials](https://www.trustdeedcapital.com/investor-testimonials) - [Investor Documents](https://www.trustdeedcapital.com/investor-documents) - [Borrowers](https://www.trustdeedcapital.com/borrowers/) - [Loan Programs](https://www.trustdeedcapital.com/loan-programs/) - [The Process](https://www.trustdeedcapital.com/borrower-process/) - [Borrower FAQs](https://www.trustdeedcapital.com/borrower-faq/) - [Borrower Testimonials](https://www.trustdeedcapital.com/borrower-testimonials/) - [Borrower Documents](https://www.trustdeedcapital.com/borrower-documents/) - [Brokers](https://www.trustdeedcapital.com/brokers/) - [Loan Programs](https://www.trustdeedcapital.com/broker-loan-programs/) - [The Process](https://www.trustdeedcapital.com/broker-process/) - [Broker FAQs](https://www.trustdeedcapital.com/broker-faq/) - [Broker Documents](https://www.trustdeedcapital.com/broker-documents/) - [Realtors](https://www.trustdeedcapital.com/realtors/) - [Loan Programs](https://www.trustdeedcapital.com/realtor-loan-programs/) - [The Process](https://www.trustdeedcapital.com/realtor-process/) - [Realtor FAQs](https://www.trustdeedcapital.com/realtor-faq/) - [About Us](https://www.trustdeedcapital.com/our-company/) - [Our Company](https://www.trustdeedcapital.com/our-company/) - [Our Mission](https://www.trustdeedcapital.com/our-mission/) - [Our President / CEO](https://www.trustdeedcapital.com/our-president-ceo/) - [Careers](https://www.trustdeedcapital.com/careers/) - [Contact Us](https://www.trustdeedcapital.com/contact-us/) - [Resources](https://www.trustdeedcapital.com/resources/) - [Recommended Links](https://www.trustdeedcapital.com/links/) - [Forms](https://www.trustdeedcapital.com/forms/) [![Trust Deed Capital](https://www.trustdeedcapital.com/hs-fs/file-16459350-png/images/foot-logo.png "Trust Deed Capital")](https://www.trustdeedcapital.com/ty-the-best-of-hard-money-articles#) - 120 Newport Center Drive, Suite 262 - Newport Beach, Ca. 92660 - CALL 1 (888) 563-5588 [![American Association of Private Lenders](https://www.trustdeedcapital.com/hs-fs/file-16459062-png/images/foot-assoc.png "American Association of Private Lenders")](http://www.aaplonline.com/) - [![Like us on Facebook!](https://www.trustdeedcapital.com/hs-fs/file-16456386-png/images/facebook.png)](http://on.fb.me/ovGeDr) - [![Follow us on Twitter!](https://www.trustdeedcapital.com/hs-fs/file-16497114-png/images/twitter.png)](http://twitter.com/#!/trustdeedcap) - [![Connect with us on LinkedIn!](https://www.trustdeedcapital.com/hs-fs/file-16469641-png/images/linkedin.png)](http://goo.gl/UXhHe) © 2015 Trust Deed Capital, Inc. | [California Bureau of Real Estate, Real Estate ](http://www.dre.ca.gov/) Broker #1805798-NMLS #296507 | [Privacy Policy](https://www.trustdeedcapital.com/privacy-policy) | [Contact Us](https://www.trustdeedcapital.com/contact-us)