Do you have the right Entity Structure for your Deal?

I often get asked: "Is an LLC Preferable to an S Corp for a Real Estate business?"

It depends on your RE strategy. The entity you form should be based on your real estate investing strategy If you are rehabbing, wholesaling or bird dogging you should form an S Corp to help you lower your self-employment tax. It's not a one size fits all in Real Estate.

OVERALL ADVICE: START WITH YOUR R.E. STRATEGY AND FIND THE STRUCTURE THAT FITS THE STRATEGY

3 Factors in Choosing the right Entity Structure

• Ease of compliance - What are the compliance requirements - annual filings, fees, separate tax returns, mandatory meetings, etc.
• Tax Liability Reduction - What is my tax exposure based on my real estate or business strategy and how can a specific entity reduce that tax liability.
• Asset Protection - How does this entity protect me from Bottom up and Top down creditors

The goal is to find one that meets all three criteria. One size does not fit all. Structures can be changed.

If you already have an LLC, Is it toxic?

Most LLC's simply do not give you the significant dollar-saving benefits that a well designed and documented LLC should give you. You may be asking this - "I am only a small operation, do I need all of this?" ??The answer is ABSOLUTELY, even more so because there is this basic rule of entity protection: The smaller the entity, the more the need for such complete documentation!

Learn more about Entity Structure for Real Estate Deals at WealthBuildingCPA