Setting up Entity for Flipping in California - Writeoffs, expenses, tax, liability.
Hi I'm setting up an entity for flipping in California. I was only planning on maybe 1-2 flips by the end of this year (so far there are 0 and next year may be more)
I've seen different ideas as to this as I'm a small size operation and currently have no recent flips. Anyone have recommendations on what I should do based on my size?
Currently my rental properties are under sole-proprietorship with heavy general and rental liability insurance.
Also, as far as everyday expenses are other flippers just writing off all expenses pertaining to the flip- even prior to flip? These include marketing, and pre-flip costs (ink, yellow letters, mailers, gas designers, consultants, education-books etc). I plan on writing off all rehab expenses during the flip. I've read that since taxation is high for flipping, it's best to take advantage of as many write-offs as possible.
As far as separating the entity from my personal, would it make sense to just open a credit card and bank account with the entity (likely S-Corp) and charge everything to that? A family member of mine is financing 90% of my deal as well, and we were going to split the NET profit's 50-50.
What are benefits and negatives of each entity as far as taxation and liability? I've read that with incompetence or mixing expenses any entity may be pierced. (also, I'm in California where LLCs cost $800/ year)
Thank you all in advance!