LLC vs. Inc for Investing

[Josh Wagner]

I searched for this topic earlier, and it did not yield many results. I am planning to wholesale houses initially, and then move on to flipping homes, buying and holding, and much further down the road getting into commercial. 

It will only be me as the company, so I am wondering if I should go S-Corp, or if anyone suggests differently?

Thank you

[Michael Plaks]

@Josh Wagner

If there is a "general consensus" - then I'm not part of it. :)

First, your question is flawed. It's not LLC v. S-Corp. The former is a legal entity, and the latter is a choice of tax treatment. You create an LLC for legal protection, not for taxes. Whether or not you need this legal protection is an attorney's call.

Once the LLC is created, you might choose ("elect") to have this LLC taxed as an S-corp. This choice does nothing for you until you generate at least $50k profit from wholesaling - after deducting all expenses. You will soon learn that hitting this number in the first year of business is very hard. If you ask me, it's too early to worry about S-corp election. Worry about making money first.

If you do hit $50k after-expenses ("net") profit - then S-corp might indeed help you. However, you will need to jump thru some hoops first, specifically start a formal W2-style payroll for yourself.

In short: create an LLC if your attorney says so, and hold on any S-corp election.