I have some personal savings and would like to use those to invest in real estate. But instead of investing in my personal name (for obvious reasons), I would like to use a S-corporation that I have formed to do the investing.
My question is - how do I fund the corporation with my personal savings? What I mean to ask is, if I have $25,000 of personal savings available to invest and a XYZ corporation formed, can I just deposit these personal savings into the corporation bank account and begin investing and taking title as XYZ Inc? Is this called co-mingling of personal and corportion funds, and can result in the liability protection not holding up? Any advice on how to go about using personal savings to invest in real estate via a corporation is appreciated. Thanks for your help.
I have this too with newly formed llc.. What is best way with taxes?
That is basically what you do. You write a personal check to the entity. The entity then deposits the check in their account and can now use that money for business purposes. The money you gave to the entity is classified as a capital contribution. Later, down the road when you take money out of the entity as a distribution, you will first draw against your previous capital contributions before you have to start paying taxes on your withdrawls as income.
Make sure to consult with your accountant so that your capital contributions are properly accounted for.
Free eBook from BiggerPockets!
Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!
- Actionable advice for getting started,
- Discover the 10 Most Lucrative Real Estate Niches,
- Learn how to get started with or without money,
- Explore Real-Life Strategies for Building Wealth,
- And a LOT more.
Sign up below to download the eBook for FREE today!
We hate spam just as much as you
Join the Largest Real Estate Investing Community
Basic membership is free, forever.