Can’t decide between LLC or S-Corp

6 Replies

For flippers in here do you buy using an LLC or an S-Corp? Which is better for tax purposes? I’ve heard you should do flips under an S-Corp and buy and holds under an LLC. Just wanted to get some opinions and why you chose what you chose. I live right outside Philadelphia pennsylvania in a suburb town so if there is also anyone in here that is from the Philadelphia or surrounding area that could point me in the right direction of a good attorney that’s my only missing piece of the puzzle. I have a CPA who also is an investor, I have a contractor, and a real estate agent. Thanks in advance

LLC is my recommendation. Easier to setup. I had an S corp (which was acquired in 2013). I now just have an LLC. They are both pass through type corps. LLC works well with my real estate software company and my investment company. Of course, verify your situation with your CPA/Legal.

There is no answer that is correct. The reason why different people do it different ways is because their situations are different. An LLC may be the perfect route for one person while an S-Corp may be perfect for another.

While on the surface, both are doing the same type of business, the facts and circumstances regarding their financial and tax goals, their other sources of income, their tolerance for regulation, their family status and their retirement goals may be vastly different, which would affect the type of entity that works best for them.

Taxes are not a cookie cutter, one-size-fits-all topic.

Thanks for the input I’m going to sit down with my CPA and go over it with him. I just wanted a perspective from other people before I did so. Thanks again!

We flip in the same area (outside of Philadelphia) and despite having multiple people, a LLC is still a better option. The best person to ask for your specific situation is a CPA who specializes in real estate.

@Steve Romano

Note that if you create a Pennsylvania LLC, you can ask the IRS to tax it as a partnership/sole-proprietor, S-Corp, or a C-Corp. So from a lawyer's viewpoint, I would say you can just create an LLC and go from there. Sometimes you may want to create a PA Corporation over a PA LLC. But I would say most people nowadays go with an LLC in most situations.

For tax purposes, I don't know if there is any difference between a PA Corporation that is taxed as an S-Corp versus a PA LLC that is taxed as an S-Corp. I assume there isn't. But it is not my area of expertise.

Disclaimer: While I’m an attorney licensed to practice in PA, I’m not your attorney. What I wrote above does not create an attorney/client relationship between us. I wrote the above for informational purposes. Do not rely on it as legal advice. Always consult with your attorney before you rely on the above information.

Just create and LLC and elect S Corp status with the IRS for tax filing. You will be an LLC that files as an S Corp

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