House hacking search in Buffalo, NY

[Amy J. C.]

Hi Friends!  (I realize this is in the new member section, not sure how to edit, whoops!)

Long story short: I'll be in Buffalo this Saturday & Sunday looking at multi's to house-hack.  Unfortunately, at this 11th hour, I'm searching for a new realtor.  The forums have been helpful as there are a few realtors who seem to be very responsive.  If you've available this weekend, I have a list to get us started, funds, and time, so let's get to work! 

[Thomas Franklin]

@Amy J. C. The operating name of a company, as opposed to the legal name of the company. Some states require DBA or fictitious business name filings to be made for the protection of consumers conducting business with the entity.

A company is said to be "doing business as" when the name under which they operate their business differs from its legal, registered name. Some states require DBA or fictitious business name filings to be made for the protection of consumers conducting business with the entity.

If you're starting a sole proprietorship or a partnership, you have the option of choosing a business name or DBA ("doing business as") for your business. If you want to operate your business under a name other than your own (for instance, Carol Axelrod doing business as "Darling Donut Shoppe"), you may be required by the county, city or state to register your fictitious name. (Note: No fictitious business name may include the words "corporation," "Inc.," "incorporation" or "Corp." unless it's a corporation registered with the Secretary of State).

With respect to tax implications, when holding properties as a cash flow investor, the LLC (or LP) is generally the better choice because an LLC has more liberal distribution rules. The key here is flexibility. LLC distributions come out of the LLC at cost basis. The members of an LLC are issued K-1 Form and have to pay taxes on all profits as though it were income, which could expose the owners to high employment taxes. Also, an LLC can elect to be taxed like an S Corporation. A S Corp is the only entity structure whose rules allow the business owner to take a "reasonable salary" (subject to social security and medicare) and then take the remaining profit (often as much as 50% of the remaining income) out as distributions not subject to self-employment taxes.

lf business income taken from an LLC under similar circumstances is subject to self-employment taxes. For a business owner with $100,000 taxable annual income, the net tax savings for using an S Corporation instead of an LLC in taxes paid every year can be as high as $7,500.

While there is never only one answer that is correct for all circumstances, there is a general rule that is almost always the correct choice. So remember, for legal and tax planning, a good CPA recommend that clients hold their properties in an LLC or Limited Partnership and run their businesses as S Corporations to avoid self-employment taxes.