Anyone Having Trouble getting started and need some guidence...Ask away!

[Account Closed]

I wholesale deals in the Washington DC, Maryland, Virginia, Market, I enjoy doing deals and helping others get started. Just wondering if anyone is running into roadblocks starting thier wholesaling business. Lets start a discussion

[Jon Holdman]

Even with an S-corp, this SET avoidance may or may not work, and may or may not matter.

If you make, say, $10K a year from your business, and a reasonable salary for the job you're doing would be $20K a year, then you won't get away with paying yourself $1 in salary and distributing the other $9,999 as dividends. The salary is subject to SET, but dividends are not.

OTOH, if you make $40K a year from your business, and a reasonable salary is $20K, you could distribute $20K as dividends and other $20K as salary and pay SET only on the $20K salary.

Yet another factor is there is a limit on the amount taxed for social security (the bigger portion of SET) of $110,100 in 2012. If you have a good day job, and make that much or more, you won't be paying the social security portion of SET on your RE income in any case.

My response in your other thread, Cara Smith was more general. New investors often get wrapped up in setting up LLCs, thinking up company names, building a "power team", designing business cards and other minutiae. Doing all that stuff makes you feel like you're accomplishing something. But it really doesn't mean squat. What matters is looking at properties and making offers. Get out there and buy something, or at least work toward making deals.

Jonathan E., if you're paying tax on your gross earnings, regardless of your entity structure, you need a new CPA.