Posted by Bronchick on April 09, 1999 at 12:52:36:
In NY you have another problem . . .
LLCs must publish a notice in the newspaper, which, as you can imagine, is expensive.
Attention Purchasers of my Real Estate Lawyer/Nuts & Bolts Courses - Posted by Bronchick
Posted by Bronchick on April 09, 1999 at 12:01:17:
Just a reminder if you were sleeping during the part the audio tapes when I mentioned it.
If you use my deed of trust or mortgage forms in your state, make sure you review it for compliance with your state’s law.
One particular item that one of my students correctly brought up is that not all states use “public” trustees for deeds of trust. Thus, you need to name the private trustee in that blank. That’s why I include forms on disk - so you can edit it.
As I have stated in my course, no forms are 100% universally applicable in every state. Any “guru” who makes such a claim is being less than truthful. The “meat” is applicable, but every state (and in some states, county to county) has different rules about the “form” of the forms. Notary acknowledgements, size of paper, margins, etc.
Re: Attention Purchasers of my Real Estate Lawyer/Nuts & Bolts Courses - Posted by sheik
Posted by sheik on April 09, 1999 at 12:20:38:
Hi Bill:
I posted the foll. before - it’s probably way down the board by now…would you mind commenting…thanks
Regarding Corp Vs LLCs:
I am, of course, trying to figure which of the above is best for me…could do with some help. I have
Bronchicks Corp course but not the LLC one.
The consensus here is that a C corp is best for flips (short term gain) and an LLC is best for holding. I am
questioning whether this is actually so…at least for my state (NY).
We all know that a corp is an excellent entity if the investor wishes to reinvest profits (which most of us
will opt for). The investor will only take a 15% hit on net profits. Also a corp has other fringe benefits, such
as, health insurace, retirement plan, as well as other perks.
BUT… here in NY, a corp has to pay franchise tax of 9% of net income or a minimum of $325 per year.
That minimum has to be paid whether the corp makes a profit or not.
Given that fact, it seems that the bottom line is that the corp will have to pay 15%+9% = 24% tax on net
profits up to $50K. That’s only 4% lower than the 28% the investor would have to pay if he/she had an
LLC which would be simpler to maintain.
Granted, the LLC may not come with all the fringe benefits that a corp has. But wait. Here in NY, an LLC
owner can opt for his/her LLC to be treated as a corp for tax purposes by filing a particular form with the
IRS, and as such, can get all the benefits that a corp usually gets. By doing this, the LLC will not only get
all the health insurace, retirement benefits, etc., that a corp usually gets but will also pay tax at the corp’s
15% rate. I am not sure about whether the LLC in this scenario will also have to pay the 9% franchise tax.
I would guess that this would be true.
Given This fact, would it not be better to form an LLC (simpler) and then decide (year to year) whether
we want to be taxed as a corp vs LLC??
This way we get the benefits of a corp without the complications.
Whew!! I sure hope this makes sense!
Your thoughts??
Sheik