S-Corp or LLC

By
Real Estate Agent with Westside Properties

I need some helpful advice please. Now that I have closed a handful of deals this year and am looking at having my best year in real estate, it's time to make some serious decisions....I have been told by my associates that forming an "S-Corporation" is much better than a LLC(limited liability corporation).

Honestly, I do not have the slightest clue as to the differences between the two. And, I am not too sure about the "pros and cons" either.

I also wanted to get some ideas as to what Realtors claim as deductions. Any helpful comments, tips and suggestions would be GREATLY appreciated!! Thank you.confused

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Tags:
burbank real estate
education
helpful tips
malibu real estate
southern california real estate
westside

Comments 10 New Comment

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Rainer
2,280
Wayne Pehrson
Realtor, Albuquerque NM
Sandia Peak Realty

Dominic,

I recommend 2 steps.

First, find out what your long term goals are. Where do you want your business to be in 5 or 10 years.

Second step, talk to an accountant.

Each one has advantages. Click here to see a brief comparison.

July 12, 2007 03:37 PM
Ambassador
549,637
Frank Rubi
Homes for Sale Metairie, La.
Frank Rubi Real Estate, LLC.

My recommendations is to see your attorney and CPA. These are your team players, they know best. I believe in my CPA more than my attorney. Good Luck.

July 12, 2007 04:11 PM
Ambassador
895,064
Missy Caulk
Realtor - Ann Arbor Real Estate
Missy Caulk TEAM
I work with a CPA that analyzed my tax returns. He recommended a C Corp. Get a CPA that works specifically for realtors in you community. He will evaluate your tax returns and make a recommendation. Warning.........not all CPA's are alike, so make sure you find one that knows RE.
July 12, 2007 07:07 PM
Rainer
52,384
Jennifer Steck
Denver Real Estate
Rocky Mountain Homescapes, Keller Williams, Denver Colorado
I agree. My CPA is one of my best advisors. Not only does she know her stuff, but she can explain it to me so I get it. That is true talent.
July 12, 2007 07:13 PM
Rainer
144,020
Robert Whitelaw
Broker, CEO, Realtor , ePro
Whitelaw & Sons Real Estate Services
If your trying to decide between an LLC and an S Corp, the state has answered the question for you, a real estate brokerage cannot organize as an LLC. If your just looking to protect your personal assets and your not planning on creating a brokerage under this entity, the LLC option is still open to you. I agree with the other posters about getting professional advice. 
July 25, 2007 10:02 AM
Rainmaker
278,087
Dom Naidoo
Malibu to the Marina Real Estate
Westside Properties

John,

I'm in process of creating an S-Corp, per the suggestion of my accountant. It seems to have more positives and less negatives than an LLC. Thanks for your interest!

August 10, 2007 12:34 PM
Anonymous #7
Anonymous
Pete

Hi, I am an accountant, and I just came across this blog while doing some tax research for a client.  I wanted to shed some light on this for all of you.  The key thing to remember is that an LLC is not a recognized entity for tax purposes.  An LLC can be taxed as a Schedule C sole proprietor, a Schedule E rental property, a 1065 partnership, an 1120 C-Corporation, or an 1120S S-Corporation.  The default taxation of LLC's is Schedule C or Schedule E if you are a single member LLC or a 1065 partnership return if you are forming an LLC with more than one person.

When you set up the LLC you can use IRS Form 8832 to elect to be taxed as a C-Corporation or S-Corporation, so what this means is that an S-Corp and an LLC can be taxed exactly the same way if you make the election for your LLC to be taxed as an S-Corp.

S-Corp taxation generally has the most favorable tax advantages for anyone making any money, but there are also stricter reporting requirements, and you will want to pay yourself a salary out of the business to avoid any IRS entanglements.

I know this can all be quite confusing, but I hope this cleared up a few things.

September 11, 2007 08:53 AM
Anonymous #8
Anonymous
Anonymous

Pete,

THANK YOU very much for your extremely help information!!!! I am glad I decided to form the S-Corp. It's amazing that I paid my accountant for an hour explanation of what you just said in about a hundred words!!! Thanks again Pete.

September 11, 2007 12:13 PM
Anonymous #9
Anonymous
John Kobeck

Wow I found a very usefull article here about C and S corps

http://www.taxguru.org/corps/scorp.htm

September 26, 2007 06:07 PM
Rainmaker
278,087
Dom Naidoo
Malibu to the Marina Real Estate
Westside Properties
John, thank you for the helpful link! I look forward to checking it out. All the best!
September 27, 2007 12:25 PM
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Rainmaker
278,087

Dom Naidoo

Malibu to the Marina Real Estate
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