Single Member LLC

[Michael Colella]

Does anyone have any insight on setting up a single member LLC for flipping properties rather than rental properties? I have heard that S-Corp entities are better for the flipping method, but I'd rather set up an LLC so I don't have to deal with the obligations that come with setting up a corporation (keeping minutes etc.). I also realize that you can set up an LLC and have it taxed as an S-Corp, but for a single member LLC the income will pass through and be taxed as a sole proprietorship anyway. I'm concerned with the fact that asset protection sometimes doesn't hold up in court for single member LLCs.

I realize that I should talk to an attorney and CPA but I just wanted to see if anyone had any insight. Thanks in advance!

[Steven Hamilton II]

Most common is the use of the LLC taxed as an S-Corp. Purchase the property in the corporation's name, you will have to give a personal guarantee and do the work, sell the property, pay yourself a reasonable salary for the amount of time you put in. I highly recommend you give yourself and hourly wage above or below minimum wage is your choice. And often times most of my clients wait until the last quarter to pay the salary to themselves so they know how much income has been brought in.

Your concern about asset protection. Keep separate bank accounts, keep all transactions separate. Do not pay for a trip to taco bell with your company checking account... etc. Treat it as the separate entity that it is.