Starting A Development Firm
Can anyone give any insight on how starting development firms operate?
More specifically, would one form an S-Corp and take a fee for each development, but hold title of the property they develop in a different entity? Is this how it works?
Any help is greatly appreciated?
try the commercial forums
Gino,
Building organizations differ. Some will form an entity, such as a partnership, specifically for the project and take title under the name of that entity. Others will take title under the name of their building/developing corp. Some even take title under their personal names. In my experience, most form a project-specific entity.
Nancy
To add to Nancy's post, you may wish to form your development company to protect yourself, something like "John Doe Development LLC." The legal details associated with LLC or SubChapter S or other entity is best left to your attorney. If it's just you, however, a single-member LLC is probably best. Check with your advisors.
So once you have your company, you now take on a new project. Let's call it the "Eagle Hill Mall."
You find a partner, Jane Smith Enterprises, who wishes to do a joint venture with you.
So now, you form a stand-alone company called "Eagle Hill Inc." and John Doe Development is one partner, while Jane Smith Enterprises is the other.
You now move forward to build your mall.
This is an oversimplified scenario, but it's pretty common.
Now comes the need for lots of patience with bureaucracy and pettyness. Abd lots of determination to get your project done.
And make sure you put you financing in place. I have seen more development firms bite the dust for that - being undercapitolized