LLC's S-Corp vs Corporation selection for tax purposes

7 Replies

Im a newbie investor. Stupid enough to create an LLC on 12-01-14. Now I have to file taxes for that LLC. I have no partners and plan to wholesale properties. Should I classify my LLC as an S-Corp or Corporation? Or can I just leave it as is - "disregarded entity" ?

Note:  I have no profits within the 31 day! period.  Any advice from people actively wholesaling is much appreciated.  Thank you.

Don't worry it's not uncommon for business to file their docs but not start business until the following year. If irs does send you a letter asking where is this LLC reported, just send back explanation it did not start business until 2015. And yes I would treat LLC as a disregarded entity for tax purposes when you do buy your first property which means you report your property on your own personal return on schedule E. The compliance cost for s-corp is not worth it for a new investor.

Cameron.. . my intent is to assign the contracts, not purchase the property.  Would you still advise the same?

@Cameron Skinner gives great advice. Dont file taxes the first year. If you didn't earn you should be fine... now that's NOT true if you earn, than don't, than do, than don't... like that. You WILL have to file every year. But if its a sole member LLC taxed as a S-corp, it will be a "pass through" and just show up on your Schedule C of your tax returns... shouldn't cost you much to have it prepared every year.

@Anthony Arias

If your LLC is single member LLC (that can be with a spouse), then the entity is "disregarded" for your Federal return.

@Anthony Arias if your just flipping contracts you would file that on a schedule C not E. E is for rental property C is small business. Keep records of everything you spent on set up LLC you can take that as start up cost when you start. also keep a mileage most newbies don't do this IRS standard mileage rate is 57.5 real estate guys can rack up some miles looking at property I logged 22,000 miles last year lowered my taxable income by over 12,000. there are several free mileage apps or just pick up a mileage log from office supply store Good Luck

Hi, Cameron -  For a newbbie.  I want to go on a route for Rental/Fix n Flip and Wholesaling.

Do I need to have private Website or a site via Wix or Site builder be suffice for visibility. For Rental I have 2 properties that I want to place under LLC and any new but have researched and found when moving into an LLC entity the note holder/lender may want the payment in full for the loan. What is the best way to approach.

For fix n flip and wholesale I can have separate S corp LLC entity? What is your view on Cody Sperber training

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