Setting up a husband and wife entity-tax advice needed!
I am beginning to develop a business plan for a real estate investing business in Iowa and I would like advice about how I should structure our business entity.
I'm meeting with an attorney soon to discuss the business start-up (and then a CPA). I have a much better understanding of entity formation from a liability point of view, but taxation risk/benefits are beyond my realm of expertise. I would love to get some great feedback so I can go into that conversation more educated from the tax point of view.
This is a challenging topic to Google... There is so much information that may or may not relate to our specific situation-it's difficult to separate the wheat from the chaff!
Key information:
This will be my full-time occupation. My wife works for the state full time and has a modest salary and great benefits. We have limited expenses and can live off of her salary alone. She will help wherever she can and is contributing with start-up costs. Although we call each other husband and wife, we haven't 'officially' been married but we've lived together for 10 years. She has a ring though, LOL. I've spent the last few years researching real estate investing but worked too much to do it. We recently relocated for her job and it has given me the opportunity to go 'all in'!
The focus of our business will be on marketing to find great deals in the Des Moines metro area. We will do rehabs as financing allows and occasionally wholesale. Eventually, we will reinvest funds into long term rentals (probably sfr's, at least initially). I plan on doing some construction aspects myself and will manage our rentals.
We will likely self finance or go through a commercial lender for our first deals. Eventually we will roll over profits into other deals (maybe through 10-31 exchanges?) and begin to pursue private funding. My hope is that by maximizing early reinvestment (and living lean) I will be able to jumpstart our equity.
Some Questions:
Does our marital status matter?
Will doing work on rehabs and/or rentals affect how I should structure an entity?
Would it be beneficial to be a licensed contractor (which is fairly easy in Iowa)?
Are there any key points I should be considering re: how we finance deals?
What should we be thinking about in case of dissolution? I hope that's not the case, but we need to cover our bases!
What am I missing? I don't know the right questions to ask!
Thanks in advance!
Matt Fisher