How to have my wholesale llc taxed

Question

I currently have two LLCs. I have my Wyoming holding company and that owns my wholesale LLC that's owned by me and my partner. How do I have them filed as? I am new to the LLC world and I hear a bunch of different things. I have somewhat of a background on the different types but I just wanted to hear what you guys do for your wholesale business and how you guys set up your LLC to save the most on taxes.

Ashish Acharya · Answer

Your statement is confusing. You said your holding comp owns the Wholesale LLC. But, you say that wholesale LLC is owned by you and your partner. That cannot be right.

Either way, if your Wholesale activity is generating more than 70/80k in net income, it might be beneficial to elect an S-corp. There are many other factors that go into that. This needs to be consulted with your CPA.

Basit Siddiqi · Answer

If you have an LLC that is owned by more than one person, you have an LLC that is treated as a partnership(Default).

Partnership's have a tax filing obligation that is due on March 15 of every year.

You may want to see if getting it taxed as an S-corp will be beneficial to you.

Michael Plaks · Answer

Since you have two LLCs, one of them being a "holding company" and formed in Wyoming, you probably have already been scammed by one of those national outfits that create expensive overly complicated setups for everybody, regardless of the business purpose.

Holding companies and Wyoming LLCs are primarily tools of asset protection. When all you're doing is wholesaling, you don't own any assets and don't have anything to protect, in my non-lawyer opinion. I question why this structure was created to begin with.

Next is the person you refer to as your partner. Whether or not s/he is really your partner depends on your relationship and contributions to the business. Maybe it is a partnership, and maybe it is not.

Before discussing tax savings, we need to know your business numbers and your overall financial situation for each of you. If you're new wholesalers, you may not generate enough income after expenses for any tax strategy to make a difference. If you do generate enough (the numbers mentioned by @Ashish Acharya are a good benchmark), then do you have other income, such as a W2 job?

If your situation does have a room for tax savings, which tax savings? The low-hanging fruit is savings on self-employment tax. They can be accomplished via an S-corporation or, in your case, more likely via guaranteed payments to partners.

And, once you choose a tax strategy, it's not about "filing it." It's about operating according to the strategy. You have to be very careful about separating money and following formalities. If you expect to get your answer online and just run with it, you're wrong. It takes a lot more, starting with getting a customized advice from a competent accountant and a competent attorney.

How to have my wholesale llc taxed

How to have my wholesale llc taxed

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