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Proper way to form these companies?

L

LuckyTaxi

Diamond Member
We'll consult with an accountant but he hasnt gotten back to us, so i figure i'll ask for input from those who have experience in forming companies.

My bddy and I are going to get into the real estate investment area and also a mortgage brokerage company.
Should we form a "corporate" company and then have something under it like a subsidiary? Our funds to purchase foreclosure houses would come from the mortgage business so we would like to have that as the main business. though, if successfully we would like the real estate business to be a thing of its own. so, instead of paying fees to form two companies, is it possible to just run it under one name, but yet distinguish between the two entities?

DBA?
 
Originally posted by: lilcam
We'll consult with an accountant but he hasnt gotten back to us, so i figure i'll ask for input from those who have experience in forming companies.

My bddy and I are going to get into the real estate investment area and also a mortgage brokerage company.
Should we form a "corporate" company and then have something under it like a subsidiary? Our funds to purchase foreclosure houses would come from the mortgage business so we would like to have that as the main business. though, if successfully we would like the real estate business to be a thing of its own. so, instead of paying fees to form two companies, is it possible to just run it under one name, but yet distinguish between the two entities?

DBA?
Click to expand...

don't talk to an accountant, talk to an attorney.

also, you HAVE to incorporate do not do this without a layer of protection between the company and your personal assets.
 
Originally posted by: PlatinumGold
Originally posted by: lilcam
We'll consult with an accountant but he hasnt gotten back to us, so i figure i'll ask for input from those who have experience in forming companies.

My bddy and I are going to get into the real estate investment area and also a mortgage brokerage company.
Should we form a "corporate" company and then have something under it like a subsidiary? Our funds to purchase foreclosure houses would come from the mortgage business so we would like to have that as the main business. though, if successfully we would like the real estate business to be a thing of its own. so, instead of paying fees to form two companies, is it possible to just run it under one name, but yet distinguish between the two entities?

DBA?
Click to expand...

don't talk to an accountant, talk to an attorney.

also, you HAVE to incorporate do not do this without a layer of protection between the company and your personal assets.
Click to expand...

ooops ... you are right ... i need an attorney. cant i just form an LLC?

 
Originally posted by: lilcam
Originally posted by: PlatinumGold
Originally posted by: lilcam
We'll consult with an accountant but he hasnt gotten back to us, so i figure i'll ask for input from those who have experience in forming companies.

My bddy and I are going to get into the real estate investment area and also a mortgage brokerage company.
Should we form a "corporate" company and then have something under it like a subsidiary? Our funds to purchase foreclosure houses would come from the mortgage business so we would like to have that as the main business. though, if successfully we would like the real estate business to be a thing of its own. so, instead of paying fees to form two companies, is it possible to just run it under one name, but yet distinguish between the two entities?

DBA?
Click to expand...

don't talk to an accountant, talk to an attorney.

also, you HAVE to incorporate do not do this without a layer of protection between the company and your personal assets.
Click to expand...

ooops ... you are right ... i need an attorney. cant i just form an LLC?
Click to expand...

it depends i believe LLC's are different state to state.

i strongly recomend an S Corp. but that's just me.

again. i'm not a lawyer, i'm just speaking from experience with my own business.
 
My b/f has an LLC.

He pays himself a salary and the rest stays in the biz. This way, if anything happens, he is not personally responsible. He has all his insurance and etc for the biz, but we are protected from anyone going after our home, should the biz go bankrupt.

🙂
 
Originally posted by: KarenMarie
My b/f has an LLC.

He pays himself a salary and the rest stays in the biz. This way, if anything happens, he is not personally responsible. He has all his insurance and etc for the biz, but we are protected from anyone going after our home, should the biz go bankrupt.

🙂
Click to expand...

i know things are different state to state, my lawyer told me specifically that an LLC isn't nearly the same level of protection as an S Corp, right now i have an LLC.

also, another advantage to an S Corp is that you can pay yourself a minimal salary and then pay yourself dividends, this way you don't have to pay as much in FICA taxes.
 
also, another advantage to an S Corp is that you can pay yourself a minimal salary and then pay yourself dividends, this way you don't have to pay as much in FICA taxes.
Click to expand...

that's kewl. I know that the b/f gives himself a salary and hasnt had a raise in five years. Cause he is single, no dependents and if he gets a raise of $50.00 more per week, he will have to pay $60.00 more per week in taxes. He already pays more in taxes than most ppl make in salary. ... but I digress.....

I know that he leased his Ford F-350 to the business. Took a monthly payment for it. And I know that he pays all the Peterbuilt expenses from the biz. As for me... well, most anything I want, I find a way to make a biz expense. But what you are saying is great. If it allows us to get some of the money out of the biz, legally... I am all for it.

🙂
 
Originally posted by: KarenMarie
also, another advantage to an S Corp is that you can pay yourself a minimal salary and then pay yourself dividends, this way you don't have to pay as much in FICA taxes.
Click to expand...

that's kewl. I know that the b/f gives himself a salary and hasnt had a raise in five years. Cause he is single, no dependents and if he gets a raise of $50.00 more per week, he will have to pay $60.00 more per week in taxes. He already pays more in taxes than most ppl make in salary. ... but I digress.....

I know that he leased his Ford F-350 to the business. Took a monthly payment for it. And I know that he pays all the Peterbuilt expenses from the biz. As for me... well, most anything I want, I find a way to make a biz expense. But what you are saying is great. If it allows us to get some of the money out of the biz, legally... I am all for it.

🙂
Click to expand...

what my cpa suggested to me is that i take a salary of say $30k per year, minimizing my income taxes and then take the rest as dividend income. basically at $30k, then on your dividends you pay just dividend taxes which are significantly lower than income taxes AND no FICA taxes (15%)
 
S-Corp vs LLC (what really stands out between the two)

a. A corporation requires formalities, annual meetings of shareholders and directors are required each year and meeting minutes are required to be kept with the corporation?s records.

b. LLCs are not required to hold such meeting; however, it is a good idea to document major decisions of the company.

But then the following statement has me confused.

"An S Corporation may have advantages with self-employment taxes in comparison with an LLC. For more information on this issue, please contact your tax advisor."


 
Originally posted by: lilcam
S-Corp vs LLC (what really stands out between the two)

a. A corporation requires formalities, annual meetings of shareholders and directors are required each year and meeting minutes are required to be kept with the corporation?s records.

b. LLCs are not required to hold such meeting; however, it is a good idea to document major decisions of the company.

But then the following statement has me confused.

"An S Corporation may have advantages with self-employment taxes in comparison with an LLC. For more information on this issue, please contact your tax advisor."
Click to expand...

you can sell shares of an S Corp and in some states, like NJ, an LLC really isn't even a corporation.

i'm not sure how it is where you are.
 
my wife and i were also tossing around the idea of doing some real estate investment with some friends and I was wondering if an LLC or S corp would be two options to keep the business seperate from personal assets or if there are different organizations for real estate holding companies? basically we just want to buy some properties, collect rent, and either disperse the monthly profits or reinvest them into the properties to gain equity...

BTW, there's a finance forum on a competing "large billfold" site that may be a good place to ask these questions also
 
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