Question
Hello everyone
My husband and I are currently in the process of getting into the real estate business. I thought that it would be a good idea to become Incorporated, and or becoma a "small business". Main reason for my thinking this way would be for tax purposes.
Are there advantages to this?
Is this something that would be good to pursue?
How would I go about doing this?
Setting up a business is definitely a good idea just for the liability issue. There are so many different business entities, you just have to decide which one is right for you. Corporations are nice b/c they offer you the most protection, but then you have to act like a corporation. This includes having annual meetings and recording meeting minutes.
I would suggest you go to your local library and research all the possibilities. That way you can get the information pertinent to your state. Talk to your CPA about it, they may be able to help or guide you.
I incorporated my own business and it wasn't that difficult and not very costly. I filed it myself and keep up all the documents. I actually use templates I got out of a book.
I heard LLC's are another good option but I don't know much about them.
Good luck!!
Hello Brooklyn.
Incorporating is where it's at. Sub chapter s corp more specifically. The corp protects you and your family and the sub s election saves you taxes. Logistically, I recommend using the corp's check book. At the end of the year you should only have to go through the corp's checkbook to calculate money in and money out. This is easier said than done but a must. Bear in mind the sub s election saves you social security taxes, about 15 percent but if you will rely on social security for your retirement take a payroll check from the corp. This will contribute into social security and still offer corporate protection. It can get a bit deep but it's worth it.
Sal
Talk with a good accountant first. If you're not already investing, don't even worry about it. you may try to do this for a month or two and decide it's not for you. If you incorporate, you've got expenses, and state requirements etc. that are a waste of resources, and time. The tax benefits of being incorporated will not seem like benefits if your corporation is not conducting any business.
When you have a little experience, and a need for additional tax planning, your accountant can discuss the benefits and the respective trade-offs of different business structures with you so you can make an informed decision that best suits your needs.
Good luck,
Jeff[ Edited by jeff12002 on Date 02/01/2004 ]
thank you all for the information. you've been helpfull.
Scheherazade, can you tell me the title of the book you mentioned?
SonnyShore, what exactly is a Corps check book?
jeff12002 thanks you make alot of sense.