LLC, Corp. - Posted by JoeH


#1

Posted by Cesar on December 17, 1998 at 20:09:41:

Your best bet would definitely be to take a look at some of the material that Bronchik has on this site.

I am not an attorney, but I know for a fact that no matter what business you are in, you need to have some protection between you and the deals. I am a firm believer in Corporations, and would never dream of doing a deal without one. As far as the differences between an LLC or C or S Corp., that you would need a professional to help you out.

I would suggest going to an attorney or an accountant, but to be honest, I have had trouble getting most of them to understand what I do, so they were of little help. The best advice on protecting your assets I have found have been through some of the material offered on this website.


#2

LLC, Corp. - Posted by JoeH

Posted by JoeH on December 17, 1998 at 15:10:13:

Was wondering if it is better to form a corp or LLC before or after I actually started doing Real estate deals. Or even if it matters or not.

Was also wondering if anyone knew where I could find how much my state filing fees for forming a LLC or Corp. are?

thanks for any response.

JoeH


#3

Re: LLC, Corp. - Posted by Steve B.

Posted by Steve B. on December 17, 1998 at 17:06:03:

As a new real estate investor from Massachusetts who is interested in flipping properties initially, my accountant recommended setting up a LLC for the added benefit of less regulations than a Corp. However, I agree that everyone’s situation is different and would strongly recommend discussing it with your accountant. If you have any questions or would like to know of your state’s requirements, email me because I purchased a legal book on LLC’s. Good luck!

Steve


#4

Re: LLC, Corp. - Posted by Sheik

Posted by Sheik on December 17, 1998 at 16:38:08:

I am no expert but I’ll say what I understand.
It really depends upon your situation. Do you have
other income? Does you spouse (if married) has
an income? etc.

From what I know Corps are better for those high
activity situations such as flipping, rehab, Lonnie deals, and L/Os.

This is because a corp is taxed at a lower rate (15% up
to 50K ???).

If you do the above type of deals as a sole prop. you
will be taxed at your bracket which will most likely
be higher. Also, you might have to pay self-employment
tax.

On the other hand, if you are a buy and hold type o’
guy, the LLC will be better because you can offset
any other income with depreciation.

Hopefully someone with more insight will respond.

~Sheik


#5

Re: LLC, Corp. - Posted by WatBob

Posted by WatBob on December 23, 1998 at 19:21:36:

Steve -
What part of Mass are you In? I am in Berkshire county and am looking for someone to bounce ideas of and to discuss issues specific to Mass.

Happy Holidays!!
Bob


#6

Re: LLC, Corp. - Posted by JHyre in Ohio

Posted by JHyre in Ohio on December 18, 1998 at 06:32:14:

The answer to the LLC/Corp question depends largly upon your individual circumstances. With that said, I am rather surprised at your accountant’s advice. For tax purposes, LLC’s are every bit as complicated as corporations, if not more so. This result occurs because partnership tax law is MORE complicated than corporate tax law (LLC’s are treated as partnerships for tax purposes). From a non-tax standpoint, I cannot say whether corporations are more complicated than LLC’s in Massachuttsetts- corporate regulation is usually a bit more complicated. In this case the added complication may be worth the cost BECAUSE of the low corporate rate (15%) for the first $50,000 of income and the ability to avoid most payroll taxes (e.g.- FICA). See Bronchick’s material on this and make DARN sure your accountant is correct. See also my reply to John Katitus’ post re taxes on flipping mobile homes.


#7

Re: LLC, Corp. - Posted by JoeH

Posted by JoeH on December 17, 1998 at 19:44:28:

Actually, I was not asking which one was better for my circumstance. I reread my post and I can see how it was unclear. What I really was asking was is it better to form either of these idenities before I actually do some Real estate deals. I am planning on flipping to start off, so a corporation will probably fit best, but I am wondering if it is advantageous at all to form one before I do this or afterwards. Or maybe it does not make a whole lot of difference. Sorry about the confusion, hopefully this made it more clear. if not, I will take another stab at it. thanks.

joeh


#8

Re: LLC, Corp. - Posted by Steve B

Posted by Steve B on December 23, 1998 at 22:46:51:

Bob,

I live in Worcester County, but I’m looking to concentrate my real estate investing throughout Massachusetts and into Rhode Island initially.

I’m primarily interested in flipping properties and would be happy to bounce any ideas around.

Let me know!

Steve