Investor · Los Angeles County, CA · Member since 2012 · 962 posts · 279 votes
This may seem controversial or “not by the book” for many.
but keep in mind CA has higher taxes and reg fees and I’m not doing more than 1-2 flips (short timeframe flips) a year and many years do 0 flips
Do most flippers put flips into LLC Or in personal name (sole proprietor) in CA (where you must pay $800 yearly plus accounting and other fees $300to $600+ yearly to maintain LLC)
Pros for personal name
-save on taxes accounting. Registration fees $800+ SOI $50 fees California and legal stuff
-keeping it simple
-easier to refinance a SFR if decide to just BRR and cash out refi in my personal name versus trying to get loan in LLC name. -save $1k+ in taxes and fees yearly
-can use the savings to get more insurance and a higher liability than the value of house.
for flipping houses in California does anyone just put into sole proprietor own name and just use the $1k+ in savings for LLC costs into Insurance or use for saving
or am I just being too risky.
Thanks
I hadn’t done a short term flip in a couple years and getting back into the game here in riverside county.
@Will F. some of this will depend on what you have to lose if you were sued. An LLC when properly formed and administered provides separation and protection of assets that are outside of the LLC from the actions of the LLC. If you don't have, or aren't worried about protecting, other assets then having an LLC is of less value.
This may seem controversial or “not by the book” for many.
but keep in mind CA has higher taxes and reg fees and I’m not doing more than 1-2 flips (short timeframe flips) a year and many years do 0 flips
Do most flippers put flips into LLC Or in personal name (sole proprietor) in CA (where you must pay $800 yearly plus accounting and other fees $300to $600+ yearly to maintain LLC)
Pros for personal name
-save on taxes accounting. Registration fees $800+ SOI $50 fees California and legal stuff
-keeping it simple
-easier to refinance a SFR if decide to just BRR and cash out refi in my personal name versus trying to get loan in LLC name. -save $1k+ in taxes and fees yearly
-can use the savings to get more insurance and a higher liability than the value of house.
for flipping houses in California does anyone just put into sole proprietor own name and just use the $1k+ in savings for LLC costs into Insurance or use for saving
or am I just being too risky.
Thanks
I hadn’t done a short term flip in a couple years and getting back into the game here in riverside county.
I do sole prop schedule C, as it turns out (for me) all the doing around with corps, filings and liabilities I was just wasting time and money. The state will get its pound of flesh and my liabilities were better managed by executing perfect permitted work and excellent insurance.
I'd sincerely recommend having a savvy CPA, Lawyer & Insurance broker. Weigh out all of the pros and cons (including costs) and make the decision that's best for you.
These are merely my opinions and may not be the best advice for you.
@Will F. some of this will depend on what you have to lose if you were sued. An LLC when properly formed and administered provides separation and protection of assets that are outside of the LLC from the actions of the LLC. If you don't have, or aren't worried about protecting, other assets then having an LLC is of less value.