Starting Out -- Do I need S-Corporation?

[Albert W.]

Hi All,

I'm just starting out here and am looking for my first property to buy-fix-flip.  I do have a day job however so this is really on the side.  My question regards taxes.  From what I can gather, If I flip a house within 1 year under my own name (not under an entity), I will have to pay short term capital gains taxes.  I'm confused as to whether or not I'll have to pay employment taxes too.  And if my intent is to flip, am I autmatically considered a "dealer?"  I have also read about the benefits of forming an S Corporation.  Let's say hypothetically I net $10,000 in the year from the flip -- under and S Corp what would my "income" be vs capital gain?  

Any help is appreciated!  

[Jake Hottenrott]

A few things to mention....

@Albert W. - "Employment taxes only apply if you pay W2 wages to someone (employee or yourself), and short term capital gains are the same as ordinary income." - To clarify, I think you meant to say that short term capital gain rates are taxed at your ordinary income tax rates.  Short term capital gains are not subject to self employment tax, while ordinary income can be subject to self employment tax based upon the source.

Talk to a CPA, happily pay for the consultation.  It will save you headaches now and save you headaches and a lot of money on taxes in the future!

Best of luck!

Jake