S-Corp - Forming an S-Corp for W-2 Income

Rental Property Investor · Member since 2020 · 172 posts · 110 votes

I'm considering starting an S-Corp so I can pay myself a salary and generate W-2 income so it's cleaner when I go to refinance property. Does anybody have any experience with this? I'd love to know your thoughts.

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Ashish AcharyaBusiness Member
CPA, CFP®, PFS · FL · Member since 2017 · 5k+ posts · 3k+ votes
5y
Originally posted by @Stephen E.:
I'm considering starting an S-Corp so I can pay myself a salary and generate W-2 income so it's cleaner when I go to refinance property. Does anybody have any experience with this? I'd love to know your thoughts.

I think having two years of self-employment is same as W2 income. Lenders are ok with that the same way you have the w-2 income. May be you post this in the lenders section so they can Chime in?
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Bill McCafferty
Real Estate Investor · Coatesville, PA 19320 · Member since 2011 · 108 posts · 178 votes
5y
The rule of thumb with creating an S Corp or at least having your LLC taxed as an S Corp, is the company should make over $50k three years in a row. The income should be generated through a product or service. I've been doing this for 5 years now.
I'm a Note Investor. I have two Companies. My own Note Portfolio (PDRS) is an LLC. PDRS owns a bunch of mortgages and also has private investors. The income is generated from my Assets.
My Asset Management Company (PMR II) is an LLC but it's is taxed as an S Corp (my accountant had to file some paperwork with the state to do that). PMR II doesn't own any Assets and it doesn't have any debt. PMR II manages other Note Investor's Non-Performing Notes. The income is generated through the service that I provide. The income that it makes is based on a percentage of what I collect from Homeowners and service fees that I charge my Clients (Note Investors).
It allows me to create a payroll for my Company and it creates a W2 Income for myself. I do pay Social Security and Medicare on both sides. It also allows me to pay taxes monthly. I also pay taxes quarterly. I run my whole world through my S Corp, it allows me to really lower my yearly tax burden.
Mark J Kohler is an accountant, attorney and investor who has a lot of free information on the S Corp. There's all kinds of strategies and techniques that can be utilized between you S Corp, LLCs and personal stuff to really lower your Tax burden.
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