Posted by JHyre in Ohio on April 14, 1999 at 15:59:14:
“If I decide to do Lonnies deals is there a good reason to Incorporate?”
YES! Read Bronchick’s articles on corps and flipping in general at legalwiz.com and Legal Corner on this site. They explain why corps are good for flipping in spite of double taxation.
“Do I just file a doing business as with the county?”
Got me. Check with the county you are in.
“I do understand that there are tax benefits to a corp. But what can you do to save on taxes when doing Lonnie type deals.”
Use a corp, keep track of and deduct all expenses. There are no magic bullets that save it all.
“Can repairs and cleanup expenses be paid for by the corp.”
Yes.
“Will my monthly payments from the buyer be deposited
in the corp account…”
Yes.
“and then pay myself from the account hence only paying the payroll type taxes.”
Actually, you pay yourself a small salary, which incurs income and employment taxes. The remainder of the profit:
- Gets left in the corp and reinvested
- Indirectly paid as certain non-taxable benefits (pension, medical, etc.)
- Distributed as dividends.
The more that goes into #1, the better. If more than roughly 30% is going into #3, you should probably consider S-corp or LLC.
John Hyre