LLC as an S Corp

[Henry Camacho]

Hello BP Community I have a question and hope to get as many answers and opinions as possible. Has anyone registered an LLC but elected to be treated as an S corporation? I have read about this in many sites and also heard this in a seminar I assisted a few weeks ago. I'm getting ready to register my company but looking for what my best option is.

[Account Closed]

I think you have it backwards. LLCs are always treated as "pass through entities" meaning that the taxes on gains/losses are "passed through" to the individual.

Corporations (or "C" Corporations) pay taxes on their net income, and then their shareholders pay taxes again when they receive their share aka dividend. This is known as "double taxation"

S-Corporations are regular "C" corporations but is taxed as an LLC, meaning the net income is not taxed at the corporation level but is "passed through" to the individual owners/members.

If you want to create an S-Corporation, you file for a C Corporation, and once filed, you fill out a form electing S-Corp status. 

That being said, it's probably best you stick with LLCs for real estate investing. There is no real benefit for S-Corp's for real estate (other than issuing stock). If you are doing flips or being really active in real estate like wholesaling, then maybe look at an S-Corp as there is some benefit by bypassing self-employment tax by paying yourself on salary. Also note that the reporting requirements are much more stringent with S-Corps (annual meetings, recording minutes, etc)

Maybe it's different in Jersey, but what I just stated is generally the same for the entire country.