I just want to get an idea on how you guys file your taxes for your wholesaling business when doing the business under your name and not in an LLC. Any creative, legal ways to save?
There are no “magic secrets” to save taxes.
Business expenses are always deductible, no matter if you are a Sch C, corporation, S-corp or LLC. You don’t have to be creative, just keep good records and follow the rules.
By the way, LLC is not a tax decision. There is no tax code for LLC. You may elect to tax it as a Sch C, corporation, partnership or S-corp based on facts and circumstances. If you don’t make an overt election, it will be taxed as a Sch C or partnership by default.
Keep in mind that wholesaling is ordinary income, not capital. As such it will be subject to income tax plus self employment tax. Total tax bite ~40%.
To minimize this, be sure to track all of your business expenses: cell phone, MILEAGE, printing, postage, MILEAGE, advertising, business meals, MILEAGE. Dont forget MILEAGE. It is potentially your largest deductible business expense.
One creative and legal way to save on taxes is to do your wholesale deals inside a self directed IRA.
everybody talks about it, but I have yet to see anyone successfully run a business inside a self-directed IRA.
rental property, yes. IF there’s a management co.
but any business where the IRA owner is directly involved in day to day operations or services is explicitly prohibited by IRS.
And even if you did, the non-passive IRA income would likely be subject to UBIT - that’s Unrelated Business Income Tax. So you really don’t avoid the tax, just move it around some.
I have my accountant handle everything… but what I do know is by using an S corp Ive saved a fortune in taxes over the past 20 years (at least thats what my accountant tells me)