A Worksheet for Forming a Property Management Entity

Many states treat managing property for a fee on behalf of someone else as a licensed real estate activity, requiring the management firm itself to hold a broker license with a designated or qualifying broker, similar to a brokerage. Confirm this with your state real estate commission before you sign your first management agreement, since in many states operating without a required license can expose the firm to regulatory penalties and can make it harder to collect fees or enforce agreements.

Security deposits and collected rent held on behalf of property owners typically have to sit in a separate trust or escrow account under strict state rules, distinct from your operating account and from any individual owner's own funds. Set this up correctly under your entity's exact legal name from your very first managed property, since a commingling issue found later is far more damaging, both to your license and to owner trust, than the modest cost of setting it up properly at the start.

Some states also require detailed per-owner or per-property subaccounting within the trust account itself, not just one pooled trust account for the whole portfolio, so confirm your specific state's requirement before your bookkeeping process is built around the wrong assumption.

Fair housing law applies to how you screen tenants, advertise vacancies, and handle accommodation requests, and it applies regardless of your entity structure or which formation vendor you used. This isn't something Bizee or Doola addresses, but it's worth confirming your leasing team's procedures are current, especially as you add managed properties or expand into new markets with their own additional state or local fair housing rules layered on top of federal law.

Each property you manage sits under its own management agreement with the owner's specific legal entity, which is often a different LLC for each property the owner holds, even if you're managing several properties for the same underlying owner. Keep these agreements organized by the owner's exact entity name on each property, since a mismatch here can complicate everything from your own liability exposure to a simple question about which entity should receive a given month's statement.

A property management firm typically hires and coordinates its own network of contractors and vendors, plumbers, electricians, landscapers, for the properties it manages, and many management agreements make the firm responsible for confirming those vendors carry adequate insurance and hold any required trade licenses. Build a simple vendor compliance file, tracked separately from your own entity's paperwork, since a vendor's expired insurance certificate discovered only after an incident is a liability gap that lands squarely on your firm, not just on the vendor who let it lapse.

Landlord-tenant law, including notice periods and eviction procedures, varies significantly by state and often by city, and eviction notices and filings generally need to be issued in the name of the actual landlord entity, not your management company's name, unless your management agreement specifically authorizes otherwise. Confirm this detail with local counsel for every jurisdiction you operate in, since a notice issued under the wrong party's name can delay or invalidate an eviction proceeding entirely, adding real weeks to a process that's often already time-sensitive and stressful for the owner.

For a property manager licensed and operating in one state, Bizee's simpler, cheaper filing plus its bundled first-year registered agent covers your own entity's needs. Once you're managing licensing, trust accounting rules, and entity compliance across several states, Doola's ongoing multi-state tracking becomes the more useful choice, since the real workload is staying licensed and compliant everywhere you manage property, not the initial filing.

Keep these records ready for owners, regulators and auditors:

• Written confirmation from your state real estate commission on whether managing property for a fee requires a broker license.
• Trust or escrow account records showing security deposits and rent held apart from operating funds, under your entity's exact legal name.
• A management agreement for each property, filed under the owner's exact entity name.
• A vendor compliance file tracking contractor insurance and trade licenses, kept separate from your other records.