Is it legal to use 2 corporations for REI biz? - Posted by sbc(va)

import · July 28, 2003, 5:47pm

Posted by Ed Eaton on August 02, 2003 at 10:31:09:

Can’t find any info on any tax related changes…

import · July 28, 2003, 5:47pm

Posted by sbc(va) on July 28, 2003 at 17:47:17:

I would like to set up a LLC in my state to handle my REI dealings and have a Nevada C corp handle the capital and provide loans and other funding to the LLC. After the REI deals turn over profit, it would pay back the C corp for debt owed. Is this legitimate?

Additional (non-related) Questions :

After you have incorporated, what percentage of courses and materials are considered tax deductible?
Do you pay the courses and books out of pocket and the Inc reimburses you or just have the company pay for it?

import · July 30, 2003, 7:31pm

A few answers… - Posted by Ed Eaton

Posted by Ed Eaton on July 30, 2003 at 19:31:42:

I’m no tax attorney or CPA or anything like that, but there is absolutely nothing wrong with having 2 corporations and having one loan money to the other, etc. I guess I’m just curious what you are trying to accomplish … why not just have one corp in your home state? I guess with 2 you can split the profits and thus each pays less taxes … what are the other reasons for having 2?

In regards to your other questions …

Courses and materials related to your business are 100% tax deductible.
Just have the company pay for it, it’s simpler. Just have your corp open a checking account and then get a ATM/debit/VISA card, etc.

import · July 30, 2003, 8:40pm

Re: A few answers… - Posted by sbc

Posted by sbc on July 30, 2003 at 20:40:44:

…what are the other reasons for having two???

The aged Nevada C corp will possibly make it easier to establish financing and create a strong credit history foundation. It will handle marketing, consulting expenses and other misc. expenditures.

import · July 30, 2003, 9:18pm

I guess what I mean is… - Posted by Ed Eaton

Posted by Ed Eaton on July 30, 2003 at 21:18:23:

What are you trying to accomplish? No net profits in your home state corp? What is the overall goal for having 2 separate corps? Aside from the credit thing…

import · July 31, 2003, 12:14am

Re: I guess what I mean is… - Posted by sbc

Posted by sbc on July 31, 2003 at 24:14:05:

I would not go as far as to create zero net profits, but to decrease a reasonble and legit amount. Personally I will have to very active on the home state corp because of the r/e.

Asset protection
Home Corp’s greatest and first debtor is the C-corporation. (another form of asset protection).
Allowing home corp to have billable debts for marketing, advertising, loans, etc. (greater documentation)
If additional LLC’s are created to oversee properties, the C-corp can facilitate identical practices to it.
Maintain personal ties solely to R/E when necessary.

I am not trying to incorporate myself buy my REI and it’s consulting handlings. The more I intertwine myself in finances, deals, legal documents the more I have a Sole Proprietorship, Inc. Not good at all in my eyes.

Some could find this route senseless and overdone but I think it is the right way to handle it

import · August 2, 2003, 8:32am

Re: I guess what I mean is… - Posted by Lyal

Posted by Lyal on August 02, 2003 at 08:32:11:

Better look real hard at the Nevada idea. Was more of a seminar buzz kinda ploy and recent changes there make it not worth considering.
Read Bronchick’s, Diane Kennedy’s and Stephanie Olsen’s articles and comments on this.
All the best, Lyal

import · August 2, 2003, 10:48am

As of now not much has changed… - Posted by JP

Posted by JP on August 02, 2003 at 10:48:25:

Certain people are however using this issue to sell people corporations in other states like Wyoming, etc. LOL.