Do we need an LLC for side work and flips?

[Christian Smith]

Thanks in advance for clicking into this. Appreciate your time. I'll try and be short but not leave too much out. 

My friend and I work in construction and want to start making some extra cash. He already has some possible deals lined up finishing some basements. We also want to get into flipping. Since there are two of us, do we need an LLC or would it just be easier to put it all under one of us and split the profit?

[David M.]

@Fred Shatzoff Luckily, I haven't had to do that.  Is that for hard money loans?  I assume its because the lender wants some assurance to limit risk to what is effectively their investment too, right?

@Michael Ablan With the recent tax cut, the C Corp looks much better since the overall tax rate is even less, so you can keep more money in your C Corp to keep flipping.  At basically 21%, you can't beat that since your personal tax rates are much higher plus SE tax (if you aren't using a S Corp).  Meanwhile, you just pay yourself a salary to live on so that is no different than any other tax plan.  Also, now you have a W2 to show for your salary instead of a complicated tax return to show to a lender.  That's the quick version...  Otherwise, second requiring the operating agreement.