Best time to create an LLC?

[Miguel Loza]

Hey BP Fam!

I live and invest in Southern CA, up until recently I've been wholesaling and rehabbing part time. As of this month I am now involved in Real Estate F/T. I assume now is the time to establish some sort of entity and I have a few questions. 

I've been debating between S-Corp. and LLC, I've been told not to form an S-Corp. until I've made over $40k, why? Can someone please elaborate? I'm leaning towards LLC right now, possibly switching the tax status to S-Corp. in the future. My wife and I would be managers, I understand it'll be considered a SMLLC for tax reasons due to the fact that we live in a community property state, what are the pro's and or con's of this?

Second, I've heard rumors about forming an LLC at the beginning of the year to avoid the $800 franchise tax fee for a partial year. Any insight on this? I'm planning on mailing in my paperwork this week, should I wait for January?

The main function of my business will be fix & flips, with some sporadic wholesaling. Is an LLC even the best option for me? Should I remain Sole Proprietor? I don't see any tax advantages, maybe I'm missing them. It's pass-through and I still get hit with the 15.3% SEP tax.

Any advice is greatly appreciated!! Thank you!