Posted by kfarzin on October 09, 2003 at 22:54:58:
An S corp is really just a tax election for incorporating as C. So really when you incorporate you would by default be a C corporation. You just elect to be taxed as a S corp. Is this correct? So this would then qualify for being exempt from the franchise tax?
Posted by kfarzin on October 04, 2003 at 19:45:09:
I listened to Bill’s article regarding DBA and title companies. My question is if my just doing flips(assigning contracts) and also doing "sub2’s will it be ok to use a DBA? We want to do a few deals using a DBA and then set up our entity here in California. Do I have to be concerned with title insurance when doing such types of deals? Please give some feedback.
Posted by kfarzin on October 05, 2003 at 19:11:05:
Thanks for the advice Bill. We were thinking of starting a LLC since it doesn’t involve a lot of record keeping and regulations compared to a corporation. Also we would like the LLC to be taxed as S Corp. Would that be a good plan? Also what do you recommend on setting up a entity? Should we do it oursleves, have some online companies do it for us, or have an attorney draw one up for us?
I generally don’t recommend the LLC filing as corp. Remember, the IRS requires documentation even though the state may not under LLC regs. Also, you have to pay the annual franchise tax with LLCs in CA ($800 min, as high as $5k per year).
A corporation is definitely something you can do yourself. I have a course on how to do it (available here online). I recommend the course over an online service since you need to learn not only how to create a corporation, but, more importantly, how to MAINTAIN it. A good CPA or accountant is also very important when operating a business entity.
Posted by kfarzin on October 08, 2003 at 22:58:23:
You recommended doing a corporation. Would an S-corp be best for doing flips and sub2’s? Also you mentioned that the franchise tax in CA ($800) doesn’t kick in until the 2nd year. I read on the state website that payment is due the 15th day of the 4 month after incorporating. Can you provide some feedback on this topic?
“As of January 1, 2000, newly incorporated or qualified corporations are exempt from the annual minimum franchise tax for their first year of business (see below.)”
C vs. S corp is a tax election that should be reviewed by a qualified tax professional who knows you entire income tax picture.