Forming an LLC for your property management business provides liability protection, professional credibility, and the ability to build equity in your own brand — rather than building equity for a franchise or large brokerage. An LLC also allows you to separate your personal assets from your business liabilities, which is critical in property management where disputes with tenants, owners, and vendors are common.
The LLC structure is the most common entity type for Texas PM companies because it provides liability protection with minimal administrative overhead compared to a corporation.
Form Your LLC with the Texas Secretary of State
File a Certificate of Formation with the Texas SOS. Choose a name that does not imply broker services unless you are a licensed broker. Obtain your Texas SOS filing number — you will need it for your TREC application.
Obtain an EIN from the IRS
Apply for an Employer Identification Number (EIN) from the IRS at irs.gov. This is required for your TREC business entity registration and for opening a trust account.
Ensure the Designated Officer is Licensed
The officer or managing member who will sign the TREC Business Entity Application must hold a Texas real estate license (agent or broker). If they are not yet licensed, they must complete the TREC licensing process before the entity can register.
Register Your Entity with TREC
Submit a Business Entity Application to TREC. This requires your SOS filing number, EIN, designated officer's license number, and the name and license number of your designated broker.
Secure a Designated Broker
Your designated broker must be a TREC-licensed Texas broker who agrees to serve as the responsible broker for your entity. Texas Broker Sponsor™ provides this service through PM Accelerator™.
Open a Trust Account
Open a dedicated trust account at a Texas bank. The account must be separate from your operating account and must be titled in a way that identifies it as a trust account. Your designated broker must have access to review trust account records.
Implement a Reconciliation Process
TREC requires monthly trust account reconciliation. Establish a reconciliation process before you accept your first tenant deposit. Your designated broker will review reconciliation records as part of their oversight responsibilities.
Obtain E&O and General Liability Insurance
While not required by TREC, E&O and GL insurance are essential for any PM company. Most quality designated brokers will require you to carry both before agreeing to sponsor your entity.
Yes, but your LLC must be sponsored by a TREC-licensed designated broker. The LLC itself does not need a broker license, but it must have a designated broker who is responsible for its licensed real estate activities.
Yes. Any business entity that performs real estate brokerage activities in Texas, including property management, must register with TREC. This requires submitting a Business Entity Application and designating a licensed broker.
Yes, if you hold a Texas broker license. However, if you are a licensed agent (not a broker), you cannot serve as your own designated broker — you must be sponsored by a separate TREC-licensed broker.
A trust account is a separate bank account used to hold tenant security deposits and owner funds. TREC requires PM companies to maintain trust accounts separate from operating accounts. Your designated broker is responsible for ensuring proper trust account management.
Apply for PM Accelerator™ or PM Multi-family Enterprise™ today.
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