All Forum Posts by: Barbara C.

Hi Dave,
Thank you for your response. but I am a bit confused about your last paragraph. If I'll be taxed SE tax whether sole prop. or business entity or not then its not worth it to incorporate other than maybe for personal protection.

After reading lots on this forum, I realize that I do not need to create an LLC but an S-Corp for purpose of (personal liability protection only) . Since the taxing will pass through to my personal income thus the same as sole proprietor and I will have to pay SE taxes anyway, so there is really no tax benefit. Is that correct? (I will be flipping wholesale deals only; not rehab or holding properties, at least for now). I think since I am new I probably be doing only 1 or 2 flips per month, I would probably not be considered a dealer but an investor.
However, is it possible to be a single member of an S-Corp? Also, I live in TX where the State filing fee is $300 pretty steep for me. If I do not incorporate but operate right now as a sole proprietorship, do a couple deals before the end of this year, (giving me some income to pay for incorporating and setting up business account etc.)
Then when I file in April for 2009 Tax year, do so as a sole proprietor business. I will be using all of the profits for my business as personal my own income, knowing I will be taxed as personal income for Feds. But not business?? Or if I do have to pay State business tax would that be at a lower rate plus the SE tax?
On the other hand if I did create the S-Corp first so that the first deal will be within that incorporated business, how is it taxed? TX is no state income tax but is there franchise(?) tax for business on the profits only? So that tax rate should be lower than the income tax rate, or is it the same rate as income due to the pass-through? Also, will still pay SE tax? (I will be wholesale flipping at a dual closings.

What would you recommend I do right now and later? Once I get the deals and and am paid, do I sign off with my name and it goes to income as sole proprietor? or can I create a business name after checking its availability but not yet incorporate? just use my business name to sign papers.?

Thanks for all your help

Thanks guys

Hi Jon:
I'd planned on creating my LLC in a different state anyway since Texas filing fee is $300. As I am not required to live in the state to transact business there, I was thinking of Nevada or FL but I like the registration process in CO.
Thanks much for your help

Hi, I'm new to BiggerPockets and have a few startup questions: Do I have to wait until I have an LLC set up before I can actual do any transactions? If so, how do I handle this when I file my 2009 taxes? Also, I suppose I would need to receive my EIN number in order to set up business bank account, for checks to pay bird dogs etc. I know I can apply for it on the government's website for free, and I can type in APPLIED FOR where its needed. However, since it seems to take a long time to get the LLC , name search etc. set up. Should I use my own personal information, and is there a way to legally transfer later to the corp before filing taxes in order to claim tax advantages? I do not want to file as sole proprietor. Another question, I feel that since I do not have the LLC established, any name I choose for my business would not really be legal, how can I use it to set up business, checking accounts, business cards etc? Sorry to ask so many questions. I do not yet have an accountant and hope to do my first deal pretty soon... money is at issue right now. Thank you