Advice on LLC and Scorp

[Christopher Ortiz]

Hello all, Can anyone recommend and good book or any resource to learn more about LLC and S-Corps. I am trying to learn the advantages/ disadvantages of all. I also want to get a better understanding of them over all. Thanks in advance!

[Brian Schmelzlen]

Originally posted by @Antoine Martel:

When investing in real estate you'll create an LLC. I use incorp.com and make my LLCs in Wyoming.

That is way too generic of advice that does not work for all aspects of real estate investing.

If you are in the rental business, an LLC generally makes sense.

However, if you do fix and flips or development, an LLC may be a massive mistake because of self-employment taxes. In that case, as a general rule you would want to use an S-corporation.

Those are just general rules; talk to a CPA before setting up a business entity because your specific situation might change things enough that the general rules don't apply to you.

In terms of what state you should be established in, you should be aware that a number of states force you to pay taxes in the state that you reside (e.g. California and New York tend to have you file based upon residence) and most states will have you file in the state if you are doing business there.