Landisville, PA · Member since 2014 · 25 posts · 4 votes
Need some advice. In the last 18 months, I've purchased 7 Properties and sold 7 Properties. This year, I believe I can scale it even further and double those numbers. I don't know what you would call it, but I guess I would be a wholesaler, as I buy very low and sell very low but still make a nice profit. I'm concerned, because, most of the properties I do not hold for 1 year (Capital Gains)? This business's entire expenses come from profit made from properties sold. I have one employee or independent contractor and may hire a second. I've been doing everything as a sole proprietor. Should I set up an LLC or INC? Which one/option will give me the greatest ability to reduce my tax liability? Thoughts? I appreciate any help you could provide.
Talking to a professional is key. Since you are generating "short term" or ordinary income, an S-Corp may be a good fit for your business. Here you would take a "reasonable" salary and split the rest into dividends which pass through to your personal return and avoid SE tax.
The S-Corp would provide liability protection as well as long as it is properly maintained.
The S-corp costs a little bit to set up and maintain and generates an additional tax return each year, but I find the cost justified.