How to Incorporate a Rental to Avoid Being Sued
- 1). Obtain an articles of incorporation form from the office of the secretary of state, either online or in person. Although you legally can create your own articles of incorporation from scratch, the standard form from the secretary of state will best serve your purposes. Contact information for your secretary of state is available through the National Association of Secretaries of State (nass.org).
- 2). Complete the articles of incorporation form. The document requires basic information, including the name of your corporation, your address and the designation of an agent for service of process--which can be you. The agent for service of process is the person who accepts court papers for your corporation if it is sued.
- 3). File the articles of incorporation with the secretary of state. You probably can save money if you file online.
- 4). Obtain what is known as a Sub-Chapter S election form from the IRS. The form is available from the IRS website.
- 5). Complete the form, which only requests basic information about you and your business. By making this election you avoid what is known as "double taxation." You do not pay taxes on the corporation's profits and on your own revenues taken from the corporation. You are taxed one time through your individual tax return. The election does not impair the liability protection of the corporation.
- 6). Obtain a quitclaim deed form from the register of deeds' office. A quitclaim deed is a simple deed that allows you to transfer property quickly. The quitclaim deed sometimes casually is referred to as a "quick claim deed."
- 7). Complete the quitclaim deed transferring title to the rental property from yourself to the corporation you created.
- 8). File the quitclaim deed with the register of deeds in the county where the rental real estate located.