Going from Sole-Proprietor/Landlord to S-corp for self managing

[Susan O.]

I'm currently reorganizing and restructuring my rentals from being a sole-proprietor landlord to having an S-corp for managing properties.

I just set up S-corp for managin the properties January 2017. It's $800 per year to do an LLC in california so I'm just owning the properties in my own name with a lot of liability and property and rental insurance.

I was wondering about how you all set up your S - corp for tax purposes or a general 'dummies guide' to do it.  I don't want to overcomplicate things with multiple layers of LLCs/entities that I've seen some recommend here.

  Do you just have them as a management firm then do all writeoffs under the S -corp. Any advice or resources or general guides would help. This is my first time S corp as all my properties have been as partnerships under schedule E and or Sole proprietorship all my life. So the accounting is now new for S corp. I'd like to maximize tax writeoffs as well.

-how to set up myself as an 'employee'

-how to minimize taxes

-what are acceptable general writeoffs- i'd like to be very aggressive as we have a lot of rental income already

-can I writeoff a vehicle -for instance I have a small pickup that I just use for the rentals for hauling or lend to workers. 

Does anyone have suggestions or books or resources for S corp setup for property management or how to maximize writeoffs? I read Amy Hans book which I like a lot for the mindset, but I'd like more details on how to for S corp from sole-propeietorship and maximizing the writeoffs.

I already have a CPA who is pretty basic straight edge and not very aggressive.

Or any other recommendations?

[Linda Weygant]

@Susan O. - It sounds like your S-Corp is set up just to *manage* the properties, not really own them, so you won't end up with some of the challenges normally associated with owning properties in a corporation.  I'm not sure what your goals are with this structure, but I will assume that this is the best structure for your situation.  

Here is how I would organize it:

1. You will still personally pay for the mortgage, HOA, property taxes, insurance and repairs out of your personal funds for the properties. These are still your personal expenses, not corporate expenses.

2.  On your tax return, you will still report all of the income and expenses on Schedule E.

3.  Rent will be collected by the S-Corp management company.  

4.  S-Corp will collect a management fee for the properties and push the balance of the rent over to your personal funds so you can pay the expenses in Item 1

5.  S-Corp will then pay for mileage, telephone, office supplies, Bigger Pockets Pro Membership, meals and entertainment, advertising, etc our of the funds received for management fees.

6.  S-Corp will also need to pay out your salary and payroll taxes and worker's comp insurance from these funds as well.  (S-Corps are *required* to pay the officer a reasonable salary).   You'll need to report and pay these income taxes either monthly or quarterly.  

7.  Your S-Corp will file it's own income tax return at the end of the year, issuing both a K-1 and a W-2 to you for the profits and salary paid respectively.  The S-Corp should issue a 1099-MISC to you for the rents forwarded to you as well.  Eventually, all of the income ends up back on your personal tax return.