As a newcomer in the home renovation industry, I highly need expert advice. I own an inactive LLC with my friend, and we intend to activate it so that the company can be eligible to utilize mortgage and construction loans in the future. In the first step, my friend is going to renovate his primary residence in a contract with our LLC. This contract makes a profit and lets the LLC negotiate with lenders to borrow mortgage and construction loans. If it goes well, the home title can be transferred to an LLC, and we can sell the property or rent it. My questions are:
- 1- How do you evaluate the whole idea? Does it generally make sense?
- 2- I understand that we should file a tax return when the company is activated. How can we formulate our business to pay the minimum tax and be profitable enough to talk with lenders?
- 3- To record incomes and expenses correctly for tax issues, do we need to make an official contract for the renovation (between the LLC and one of the owners), or is simply issuing invoices and receiving payments in the LLC's bank account enough?
