With the income property or mortgage in an LLC the income flows to you personally similar to a S corp. You have the added liability/tort protection in the LLC.
By using the C corp you have more flexibility in write offs-medical reimbursement, pension plans etc. With flips you will pay double tax on those funds dispersed by salary. The money dispersed by dividends is not subject to medicare tax. After all the writeoffs and making the money you need to live on why not do the other deals in a Roth IRA. No tax.
Posted by JHyre in Ohio on December 18, 2000 at 10:57:59:
on alot of things, most especially how much the owner makes outside of the company, how much the company makes AND how much in the way of deductions it creates…both numbers are subject to a certain amount of planning, within reason. If a corporation produces more than $100,000 in net income (that is AFTER all deductions), then electing S-status should be seriously considered. Bottom line, one size does NOT fit all. C-corps DO get SOME deductions that S-corps and LLCs do not get and those deductions DO have value, BUT that value must be weighed against any downside…C-corps that make “too much” DO get double-taxed (or the money sits inside indefinitely), and that double-taxation can be larger than the benefit of the C-corp exclusive deductions, contortions to hide, funnel or otherwise shed excess income to the contrary. One size does not fit all and a good answer requires detailed examination of your indivdual circumstances.
why not an s corp for flips? aren’t c corps generally for businesses with more than 5 employee’s.? what about double taxation on c corps as opposed to s- corp?
You need to check, but there is also a threshold of I think $50,000 before the double tax even becomes an issue. But bottom line, you don’t take out any ormuch in dividends to avoid the double tax, like Bud said.