hi all i’ve read some really good stuff here, keep up the good work.
i’m doing wholesaling and looking to get my first buy, rehab and sell.
i guess it will be hold short term using hardmoney.
i heard for flipping and holding 12 month or less to do an llc, sub chapter s for tax treatment take a 35% of income. and let the remainder 65% as distribution, how would the rest be handle ?
what i want is to protect my self , my assets and pay less tax if it can be done! :banghead
Sit with an attorney and CPA who have experience in this area and have them develop a plan for your specific situation. You are wasting your time and money with some one-size-fits-all solution.
thanks bll, thats the most obvious and the best way to go!
i just figured if there where somebody that is in the same
situation and what they,ve done so far, you know like to
get different feedback from diff. people i hope.
really thanks for your response bll
Be careful with what other people tell you. What they do may be inappropriate for you due to differences in your situation. You current situation may necessitate one solution. You in 10 years will be another. You married with kids versus being single are two different plans as well. Entities interact with all areas of your life and each one needs an impact analysis. Most people screw up because they don’t realize the interactions. That’s why you need a qualified planner to evaluate your situation and create a plan just for you.
your absolutely right that makes sense,
thanks once again.
For what it’s worth, I was told by an atty I called to just use one of the more reputable services to create the LLC because it would save me money. If I do it, though, it would be a single member LLC. If you were going to have other members or partners, or something more complicated that that I would think it would be better to consult an atty as BLL says. My 2 cents.
thanks holdandbuy, yeah i just want to buy something fix and sell and when i get a wholesale deal under contract to assign i think it’s better to do/buy under an llc then my name and also, i can try to build business credit. i call irs and ask them if i’ll pay more taxes doing busines under an llc or in my name and they could’nt say, so then i ask her i guess it would not matter cause the llc would be solepropratiery and she said i guess so i just said ok thanks. i’m not sure if i ask the right question and i also know she can’t give legal advise but dam say something at least. i guess i’m still lgnorant .
thanks for your 2 cents holdandbuy
An LLC is tax neutral. There are only the additional costs of the annual fee, registered agent, and need for an attorney to represent the LLC in court.
If your goal is to buy in a business name, then a DBA is much cheaper.
sorry bll whats a dba?
“doing business as” usually registered in your county clerk’s office.
and to reiterate: an LLC is tax neutral. You can choose to tax an LLC as: sole proprietor, partnership, S-corp, C-corp depending on your specifics.
thanks mcwagner,
if i do a couple of wholesale and buy,fix and sell a year just as simple as it can be whats the best way to setup a single member llc?
i know that the more deals i do things will be different and by then i will have money to get an attorney and/or cpa cause then i will grow and would like to hold some properties, and things would change.
the reason i would also like to setup an llc cause i’ve talk to a couple of loan co. and explain to them my situation and what i’m trying to do and how, and they said set up an llc and i would give you a loan and others credit line.
i will appreciate any comments, cause by asking i’ve learned alot of stuff.
Single member LLC set up is simple. Find a free operating agreement on the internet and file the proper paperwork with you Secretary of State. When you are ready, you can hire an attorney and tax professional to set you up properly.
thanks bll
i talked to this r e lawyer that i meet at the rei club i go to and he charges $550 for the setup book,stamp everything etc… i know i could do it for $125 without the stamp, books etc… but it’s becoming a challenge no real answer to my questions, i guess good advise but that’s it. i did not want to spend that money cause it’s going on my credit card and i’m reducing my debts. thank god.
i probably do it on monday or tuesday so i’m still open for suggestion thanks !
Eagles,
The good thing is you only need to create one, unlike with rentals where you might have 10 of them.
HoldAndBuy,
I hope the atty knew your needs in specific, and didn’t just tell you to go set up an llc by yourself because it is cheaper? Personally, my RE Lawyer is my lifeline. Lease, BAM! Sales Contract, BAM! Subisdary LLC, BAM! LLP agreements for bigger deals, BAM!
Sure we spent a lot of expensive time on the front end talking about my goals and what the long term plans are so that we can properly protect assest, liability and so forth. But now most of my forms are boilerplates and he just has me come in to sign and get it notorized.
If the atty you called didn’t sit down to establish what your needs were, then I would keep looking because as is almost the mantra on the board, Consult with your Atty, is a big aspect of RE.
If you want to protect yourself, you definitely do NOT want to “do business as”. Lets be clear.
Joe Smith doing business as Acme Real Estate Investment.
Joe Smith’s name is right out there in front. He has no protection from any type of liability and is not anonymous. There are many levels of protection that you can institute. How much is necessary to start with? I would say a LLC should suffice. Putting an investment property in an LLC limits your liability to the assets of the LLC. And would separate personal assets (residence, car etc) from investment assets. As your business grows, you may want to consider additional asset protection such as a land trust for each property. A good asset protection attorney can advise you when you have made some money and can afford to retain him!
Good luck.
This set up has the same liability protection of a DBA when using a single member LLC as the OP has said he would do.
How does this provide any asset protection? Land trusts are revocable. They will help for estate planning and business continuity, but will do nothing to limit liability or fend off a creditor.