Benefits of LLC vs no entity with flipping
In about a year I plan on starting to flip houses with a partner. Recently, I've started to do some research on different entities (S-Corps, LLCs, etc) in order to potentially minimize taxation on our profits.
Based on my research (from a tax standpoint), I don't understand what the benefit of an LLC is (S-Corp elected or not) versus using no entity at all.
From what I understand about LLC taxation, I would make profit, that would be passed through to myself and my partner (50/50). We would then each pay self employment tax plus income tax on that money regardless of whether we take it out of the business or not (we intend not to).
Why would I choose that route versus using no entity and just paying capital gains tax?
The intent of the house flipping is to snowball profit over 3-5 years (while continuing to work W2 jobs) until we can purchase an apartment building. At that point, I can understand the LLC (for the liability issue). Until then, no entity makes sense to me.
What are your thoughts on this?
Thanks in advance!