Collecting Sales Taxes, Advice Needed

[William Jasin]

I am setting up an LLC. My attorney said I can use 1 LLC for all my business but I don't know if she is thinking about all the tax consequences. Under the LLC I am going to have 2 DBAs. One is for my wholesale and flipping deals and the other is for an electronics business that I am starting. For the electronics business I think I will need a tax certificate for buying parts wholesale and charging customers sales tax. Will having the tax certificate have an effect on the real estate business?Should there be more separation?

Another question I have is about my future rent and hold properties. Should I use a separate entity for the holding company so it can be taxed as capital gains instead of as a dealer?

[Account Closed]

You are correct in questioning your attorney.  They are two separate business activities.  Each business activity should have it's own entity.  I recently ran across a similar court case where the IRS took issue with this (thought I think the facts are slightly different).

If it's a single member LLC, what business activity code would you choose on Schedule C when you report the income?

Having a rehab business with a resale license will invite auditors from local jurisdictions as well.  You should be paying sales tax at the point of purchase for all materials on your rehabs...if you're pulling permits to do the work, most jurisdictions will ask you to put up a use tax bond for the work.  You'll have to provide proof you paid the sales tax at purchase in order to get a refund.

You'll also need to provide a business activity code when you apply for a sales tax license.