Hi everyone. I am wondering if one were to decide to start private money lending, what entity would be the most tax-advantaged? Or put it more simply, if there are any private lenders out there, what entity do you use?
If you're expecting to make income over $200,000 per year you may want to look into either the LLC or Corporation.
If you're starting off smaller with your own personal money making only and small notes the cost of setting up and maintaining one of those entities may outweigh any tax advantage you would see. You can just start as a sole proprietorship.
Remember each state has rules and licensing governing any type of lending. Check those out before you start lending.
For more business information you might want to checkout http://www.examiner.com/x-22012-Seattle-Small-Business-Examiner
To me the entity is a non-issue. You can do it in your name, LLC, or Corporation ... I do some of each. It's only if I foreclose on it do I move the actual property to an LLC.
Private lending is fully taxable - if you can do some of it within a self-directed IRA do it !
If your personal tax rate is below corporate tax rates than keep it in your name or a single member LLC.
There may be some other useful tips in one of my presentations on the topic:[LINK REMOVED]
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