Silent Partnership - LLC or S corp?

Question

Hi folks,

I have an opportunity to partner with someone to rehab and flip a property and was wondering what is the best way to proceed - open a LLC or S corp?  Assuming that either would be better than doing it personally to protect myself and also to lower the taxes on any profits.

Thanks,

Sonny

Basit Siddiqi · Answer

@Sonny SachThere is more information required to provide an accurate answer.There are potential tax savings with an S-Corp. However, there are extra admin costs associated with an upkeep of an S-corp that would not have with an LLC(taxed as a partnership).S-corp is normally advised if the tax savings is greater than the admin costs.You may benefit from having a private consultation to determine this answer.Information such as how much income you earn, income to be projected from the "business venture", goals, etc would be required to provide accurate advise.

Scott Smith · Answer

You would need an LLC and I always opt for an S corp designation for the LLC for flippers. There are more costs associated with than an LLC taxed as a pass through entity but in the end, you keep more money in your pocket because of the lower tax rate that you can take advantage of.

You can check out this article for more: https://www.bizfilings.com/toolkit/research-topics/managing-your-taxes/federal-taxes/llc-electing-s-corp-statusthe-best-of-both-worlds