Posted by Anthony Henry on April 07, 2000 at 11:47:47:
Forgive me if I was a bit obscure. I think you answered me though. But here goes I really wanted to know what would be the major difference in creation a C-corp vs a LLC. Or if you could have both working for you as a REI, esp if I only have one rental to date and am now looking heavily into L/O and occasional flips. Hope this clarifies. Thanks
Mega-Bank, Mini-Bank, or Schwab One for new C Corp? - Posted by Keith_GA
Posted by Keith_GA on April 06, 2000 at 16:48:04:
Hi all,
I am setting up a “C” Corp for my real estate quick-turn properties.
Any thoughts out there on where is the best place to park the corporate bucks? The fees seem about the same at most of the megabanks I have called.
It appears the choice will be made after considering convenience, service, and other real estate related factors I haven’t thought about yet. Could sure use some help from you experienced pros on the last part.
All sage advice appreciated!
Keith in Atlanta
Why C-Corp? - Posted by Orlando(AZ)
Posted by Orlando(AZ) on April 07, 2000 at 24:27:21:
Obviously you have your own personal reasons for chosing a c-corp, but why. Unless you are planning on making some extravigant money and/or bring on lots of investors, you should look at a s-corp. The only major difference is that the tax liability in a s-corp is passed on to you, the shareholder. In a c-corp, to get any money, first it is taxed at the corporate rate then taxed agin at your rate. Just throwing something out there you may not have known.
Orlando
Re: Why C-Corp? - Posted by Keith_GA
Posted by Keith_GA on April 07, 2000 at 11:21:14:
Hi Orlando,
Thanks for your reply. I was advised by my regular CPA (last month) to go this route for a few reasons. The major reason being that I have another non-real estate source of income and that any profit from quick-turn properties would immediately be taxed at the highest rate in a S corp. Also, with a C corp I can decline to take a salary for a few years to build capital. He also had some other reasons.
Having said that, I am going to see another accountant next week for a second opinion. This 2nd guy is very real estate savvy and it will be interesting to hear whether or not the two accountants have different strategies.
Keith
Re: Why C-Corp? - Posted by Sheik
Posted by Sheik on April 07, 2000 at 09:23:24:
The “double taxation” only applies to dividends paid out by the c-corp. A small corp doesn’t have to pay out dividends, the owner can draw a salary which is tax deductible to the corp.
After all the corp expenses (salary, keogh contribution, car, etc), the monies left in the corp will be taxed at 15% (up to $50K). This profit (after tax) could then be used to reinvest in RE.
If you are an s-corp, the above profit will be taxed at you income level which will most likely be higher (especially if you have another job).
Sheik
Re: Why C-Corp? - Posted by David Alexander
Posted by David Alexander on April 07, 2000 at 02:39:12:
Yep, but there are more right offs for C corps, and if your playing the game right you should spending the too much money that you have and never letting it get out of the C Corp at least above the 15% rate. Like maybe for instance having another entity with a different tax year end send you a bill for management, so then you have another 12 months to spend the money pre tax.
David Alexander
Re: Why C-Corp? - Posted by Orlando
Posted by Orlando on April 09, 2000 at 13:37:59:
Like I said, I was sure you had your own reasons for going with the C-Corp. To me it looks like you made the best decision with your income situation. Good luck and I hope you do well with your venture.
Orlando
Re: Why C-Corp? - Posted by Anthony Henry
Posted by Anthony Henry on April 07, 2000 at 09:45:52:
OK Sheik I ahve a question. I dont think Im ready for this step yet(creating a c-corp or LLC) but I was wondering how do all these tie together. How do you set up the C-corp in conjunction with an LLC etc etc. Or do i just need to go sit at Bronchick’s feet for a week :). Thanks in advance for the enlightenment.
Anthony Henry
Re: Why C-Corp? - Posted by Sheik
Posted by Sheik on April 07, 2000 at 11:09:55:
Not sure what you mean by “tie together”. Setting up an entity “in conjunction” with another will be dependent on your personal situation and what you are trying to accomplish. Initially you may not need to set up more than one.
I know this wasn’t much help but I am not too sre I understand what you are asking.
Sheik