Posted by JHyre in Ohio on December 31, 1998 at 11:57:23:
An S-Corp is quite similar to an LLC, if slightly less flexible. An S-corp passes income through to its shareholders like an LLC. As such, flipping deals are taxed at your personal rate which is usually greater than the 15% corporate rate (on first $50,000). Using a C-Corporation generally allows you to reinvest 85% of profit, while LLC/S-Corp allows you to reinvest a lower rate, depending upon your personal tax rate. Even though you will face eventual double taxation with the C-Corp, the present value of being able to reinvest most of your profits is often greater than the present value of being taxed once immediately. The higher the return on your reinvestment, the greater the present value of deferring full (but higher) taxation. A number of other VERY subjective and personal factors influence the choice of S-Corp status, so you should talk to a professional and tell them ALL of the facts to ensure the correct choice.