Can't seem to figure best way to set up business

General Real Estate Investing
1

Hey All,

This is one area I struggle in. I think I’m great at finding a deals, researching the properties, working the numbers but I can’t seem to grasp what type of entity to set up and why?

I’m looking into purchasing an apartment bldg in the next couple months. Should I work on setting up an LLC or C-corp now? Or wait until I purchase the property? If I wait, would I just tranfer the property into the business name?

Here are a couple more questions:

  1. If the business is not set up can I still write expenses off?
  2. I set up the business in the state the property is located, correct?
  3. Income tax - if you live outside of the state you purchase - Is there double tax or anything I should be aware of?

I’m really considering investing in Texas, but just read about the franchise tax. What is the best entity to set up for Texas properties?

Thanks,
Jordan

2

Jordan,

The best entity for buying real estate in Texas is a limited partnership, because it can be set up so that zero franchise taxes are owed (a loophole the Secretary of State has yet to close).

However, if it’s a new business or one that will not generate that much income for awhile, an LLC is probably fine (you don’t owe any franchise taxes until you collect $150,000 of receipts in a year).

I can help you set things up if you like.

Best, Drew

3

Jordan,

I would encourage you to read back thru the old post in the forum; this has been discussed extensively in the past with a lot of excellent information from many contributors.

It is a very valid question