Best way to structure my entity?

Question

Hey so I'm going to set up an LLC to flip houses under in a couple months and I need some info on how to exactly structure the entity. I know a lot of people use the S Corp election for flipping houses because of the tax benefits associated with doing so, but I have other investors on the deals I'm doing and my CPA said it would be a lost simpler to use an LLC without the S Corp election for what I'm going to be doing. Anyways, I'm wondering if there's a way to give people different amounts equity in each deal under the LLC without giving up equity in the LLC itself. I want to be the sole owner of the actual entity but have the flexibility to have different investors with different amounts of equity in each deal I'm going to be doing. If anyone has any info on this that would be greatly appreciated.

Zander Dragony · Answer

@Ryan Saulle Hey thanks for replying! I'm aware of the tax benefits of using the S Corp election as I have consulted with multiple CPA's about this. However, because I have different investors going in on each deal, if it was structured as an S Corp that could be considered as issuing a security which would make me have to follow SEC requirements and so on. Correct me if I'm wrong on that but I'm pretty sure that's the case. Anyways, I'm looking for a way that I can give different investors equity in each deal without giving away equity in the actual entity the deals are in. If you or anyone else knows a way I could structure the entity to do that, or if I could do that under the S Corp without filing with the SEC please let me know, thanks.

Christopher Cousin · Answer

@Zander Dragony From a CPA, get a second and third opinion. If your income is sufficient, you could potentially save thousands using the S-Corp structure.

I would suggest contacting Kohler and Eyre, CPAs and taking advantage of their free 15 minute consultation to get your questions answered.

Disclosure: I do not work for them and this is not intended to be tax advice.

Ryan Saulle · Answer

@Zander Dragony Hey Zander, I am not a CPA or attorney and don't like giving legal or tax advice but I personally have my flipping business set up using an S-corp.

One piece of advice I will give you is if your CPA is looking for "simplier", I would find another CPA because he or she may not be looking out for your best interests.

Hope this helps.

Ryan