If i want to buy REO's and possibly flip some while maybe renting and leese optioning others what is the best structure for forming a company? I will have parterns so is a limited partnerhship or LLC or S-corp best? Should i form different companies for the different activities listed above?
Real Estate Investor · London · Member since 2008 · 3k+ posts · 74 votes
19y
The answer will vary slightly by state as LLCs are not exactly the same in every state.
The LLC has different choices for tax purposes. If you open a sole member LLC the income is reported on your personal tax return. There is no difference for tax purposes. You still have liability protection.
If the LLC has 2 or more members you can elect to be taxed as a corporation or as a pass thru entity like a partnership. In the second case the members of the corporation each report the income on their tax return and there is no tax at the LLC level. The LLC files a K1 for each member (think partner).
For most people the S corp offers no advantages. In some cases a C corp is a good idea. Mostly for short term income and when you have employees, want to set up medical and pension plans, etc.
You can become an expert in all the above of you can hire someone who already is. I do the later and they get to read the tax code and the legal details while I focus on finding deals. I make more money than they do for the time invested.