LLC vs Corps. - Posted by Jason

Real Estate Investing
1

Posted by Jason on June 02, 2005 at 06:58:49:

Thanks, this helps…I’ve read in a book by Diane Kennedy that an S-corp is good for flipping and an LLC is good for holding…I just wanted a concensus on what other people do.

2

LLC vs Corps. - Posted by Jason

Posted by Jason on May 30, 2005 at 21:26:30:

First of all, I know the differences between LLC’s, C-Corps, & S-Corps, but I would like to know which entity everyone (who know’s the differences and benefits of each) would choose for…

1.) Holding real estate and renting
2.) Flipping

I am going to be buying my first investment property within the next few months and am leaning towards a Nevada Corp. Does anyone not recommend a Nevada Corp. and if so, why?

Thanks,
Jay

3

Re: LLC vs Corps. - Posted by Natalie-VA

Posted by Natalie-VA on June 01, 2005 at 07:27:00:

We use an S-Corp for our rehab and flips and we pay tax on these dealer transactions as ordinary income. We also give the max to our 401(k) plans and the corp gives 25% of our W2 income to profit sharing.

We hold our rentals in an LLC. We have 4 in there right now. I plan to open another LLC for additional rental properties so our eggs aren’t all in one basket.

4

Re: LLC vs Corps. - Posted by Jack

Posted by Jack on June 01, 2005 at 24:44:17:

I’m not an attorney or an accountant, but have been advised the following by my attorney, accountant and one of my mentors:

  1. Use an s-corp for flipping properties. It will help avoid being classified by the IRS as a “dealer”, thus minimizing your tax liability on a flip.

  2. Use an LLC to “buy and hold”. It will help protect you from personal liability.

  3. For lease options, use an s-corp.

I hope this helps.

Jack
http://www.raysonproperties.com

5

Re: LLC vs Corps. - Posted by larry

Posted by larry on May 31, 2005 at 07:43:12:

If you plan on not taking possesion of a property and just flipp in the begining while you gain experience then all you need to do is setup a Do Business As (DBA) at your local county office. The risk is minimal in flipps unless you have aproperty you cannot flip to another investor.

HTH

Larry

6

Re: LLC vs Corps. - Posted by David Krulac

Posted by David Krulac on May 30, 2005 at 22:16:48:

I’m not a big fan of Nevada Corps because:

  1. you’ll still owe tax in the state the income is earned, unless your home state also doesn’t have a state income tax.

  2. if your Nevada corp does business in another state like your home state it will have to register as a “foreign coporation” (also applies to LLCs) and in many states pay additional foreign corp taxes.

  3. In most cases your corp/llcs should be formed in the state you’re doing business.

  4. I am neither an attorney nor a CPA, please check with a competent real estate attorney or CPA in your state.