I recommend buying and selling a property or two prior to establishing your business entity. Then if you quit, or decide that the work is too difficult, of that you're not cut out for this business, you haven't wasted your time and $$ establishing a business entity only so you can spend more of both to make it go away. Talk to your accountant and get let them tell you when it's time to establish a business entity. Get his opinion regarding the different types of business structure based on the tax liability of each, then talk to an attorney about business structure with regards to Liability, asset protection etc. When it's time, you'll know.
Actually I have already done several investments and am ramping up my marketing in the wholesale market.
I have had several consults with entity structure companies including a consult with my CPA.
There seem to be many options and I am just trying to make my decision based on the information provided to me.
So far I am leaning towards the LLC taxed as a CCORP. From what I understand this provides me the flexibility to transfer properties into another LLC (to hold long term) without a taxable event. This way if I decide to hold a deal long term I can transfer it to my long term portfolio.
I understand that using a SCORP and a CCORP are not a viable option. Due to the fact that if I were sued personally some one could potentially control this entity through my stocks. So those options are out.
I guess what I am afraid of is that based on my revenue projections for the year, I am concerned with my ability to shift enough income (through marketing/management fees) to my other entities so that I am not paying a crazy amount of tax.
With so many opinions I was just looking to see what other people in the field were doing.
There's plenty of financial plans, that include business structure, tax planning, etc. The more extensive and complicated they become, the less understandable they are. That does not necessarily mean that they provide the best protection for you, and your current situation.
If you are convinced that you are ready, settle on something. Build more protection into your plan as you need it.
You don't need a plan as thorough now as GM or Microsoft. Your needs will change as your business grows. Allow your business structure to grow with you.
In my opinion what I am discussing above is not going overboard. If I can save myself several thousand dollars a year in taxes by educating myself on the correct entity for my situation, I will do it every time. As far as protection... I am not going to work my butt off to have someone take it all away. I also refuse to work two months a year just to pay my tax bill.
I need to think through how this income will effect my current portfolio!
What entity structure are you using in your business?
I recommend buying and selling a property or two prior to establishing your business entity. Then if you quit, or decide that the work is too difficult, of that you're not cut out for this business, you haven't wasted your time and $$ establishing a business entity only so you can spend more of both to make it go away. Talk to your accountant and get let them tell you when it's time to establish a business entity. Get his opinion regarding the different types of business structure based on the tax liability of each, then talk to an attorney about business structure with regards to Liability, asset protection etc. When it's time, you'll know.
Actually I have already done several investments and am ramping up my marketing in the wholesale market.
I have had several consults with entity structure companies including a consult with my CPA.
There seem to be many options and I am just trying to make my decision based on the information provided to me.
So far I am leaning towards the LLC taxed as a CCORP. From what I understand this provides me the flexibility to transfer properties into another LLC (to hold long term) without a taxable event. This way if I decide to hold a deal long term I can transfer it to my long term portfolio.
I understand that using a SCORP and a CCORP are not a viable option. Due to the fact that if I were sued personally some one could potentially control this entity through my stocks. So those options are out.
I guess what I am afraid of is that based on my revenue projections for the year, I am concerned with my ability to shift enough income (through marketing/management fees) to my other entities so that I am not paying a crazy amount of tax.
With so many opinions I was just looking to see what other people in the field were doing.
I'd love to hear what you are doing!
Here's my take on things.
There's plenty of financial plans, that include business structure, tax planning, etc. The more extensive and complicated they become, the less understandable they are. That does not necessarily mean that they provide the best protection for you, and your current situation.
If you are convinced that you are ready, settle on something. Build more protection into your plan as you need it.
You don't need a plan as thorough now as GM or Microsoft. Your needs will change as your business grows. Allow your business structure to grow with you.
In my opinion what I am discussing above is not going overboard. If I can save myself several thousand dollars a year in taxes by educating myself on the correct entity for my situation, I will do it every time. As far as protection... I am not going to work my butt off to have someone take it all away. I also refuse to work two months a year just to pay my tax bill.
I need to think through how this income will effect my current portfolio!
What entity structure are you using in your business?
Sorry to be so defensive!
I understand, and I did not intend to indicate that you were going overboard. Sorry if I offended you.
Erin:
Jeff gave you the best advice! Dont worry about setting up a corportation yet. Get out there and do some deals...
Do you know what the best entity is for setting up a wholesale company? The answer is NONE. Dont ever take title! Simply "Assign".
Best Regards,
Jeff Adam
[addsig]
I am currently using an LLC.
Jeff:
That if fine. Just dont take title in your wholesale deals and assign.. You can use your LLC to buy and sell properties with.
Best Regards,
Jeff Adam
[addsig]
For flips consider having a single member LLC that owns the properties. Have that "single member" be a C Corp.
This way the corporation owns the LLC for protection, and you still have a c corp for tax savings.
Z