Corp v LLC - Posted by Bob-FL

import · November 7, 2001, 5:41pm

Posted by Bob-FL on November 13, 2001 at 20:16:09:

Thanks for your help and responses. Dan and I have set up (actually in process right now) an S-corp for the services. We will start with that and as our activites develop we will set up the LLC and a corp for flips/rehabs.

Thanks, Bob

import · November 7, 2001, 5:41pm

Corp v LLC - Posted by Bob-FL

Posted by Bob-FL on November 07, 2001 at 18:41:10:

I am debating between which entity to use for my business of doing property repairs and rehabs. An accountant I have talked with seems to be hesitant to use the LLC because it is the “new format on the block” and that judges/courts/IRS will tend to pick on it more than a corp. How much of a concern should this be? What other issues should I be aware of?

Thanks for your response.

Bob-FL

import · November 8, 2001, 4:53am

Re: Corp v LLC - Posted by JHyre in Ohio

Posted by JHyre in Ohio on November 08, 2001 at 05:53:02:

While LLCs are newer than corporations or limited partnerships, they’ve been tested enough to provide a good degree of comfort…very few cases have treated them differently than corporations or limited partnerships (depending on the issue at hand).

More pertinent concerns focus on the nature of your activities…if you are rehabbing for resale, then an S or C corporation is probably the way to go, while an LLC is probably best if rehabbing and then renting.

John Hyre

import · November 8, 2001, 7:30am

More specifics - Posted by Bob-FL

Posted by Bob-FL on November 08, 2001 at 08:30:49:

Let me be a bit more precise about what we are trying to do… Dan and I are beginning business together to provide services for lenders and real estate agents who are responsible to get foreclosed properties resold. We will rekey and secure the property after the residents have left, clean it out and remove all the personal property left behind by the previous owners, and do whatever repairs are needed by the lender or the agent to ready the premises for occupancy at closing with a new buyer.

We also will provide eviction services - meet the sheriff’s deputy who serves eviction papers at the residence and then remove the personal property from the home.

This is a “stand alone business activity.” We will bid the trashouts and repairs for each property and either “self-perform” the work or secure other subcontracts to do the things we cannot or do not want to do and day labor to haul the trash.

Dan has been involved in this business for several years and has many contacts and experience… so we are not taking a shot in the dark hoping the idea will work. We know there is a huge need for the service and that lenders/agents are looking for more people to service their needs.

In addition as a second business activity, we (as investors) will try to buy some of the properties to rehab and then resell or rent them.

Should these activities be done in seperate entities? What recommendations do you have about a legal structure?

I hope this is more speicific and gives a better picture of what we are doing.

Bob

import · November 12, 2001, 5:28pm

Re: More specifics - Posted by JHyre in Ohio

Posted by JHyre in Ohio on November 12, 2001 at 18:28:29:

I would use separate entities to segregate risk and keep the activities themselves separate. The latter point becomes more important if you part ways down the road…segregation of activities may make subsequent division of businesses between you a bit easier. Corporation for the services, probably S, though that decision depends on numerous details. LLC for rental properties, probably a corp for flip properties.

John Hyre