Sam asks the following question:
Q: I live in Ohio and would like to know whether I should set up an LLC or an S Corporation. I am beginning to take courses sponsored by Robert Kiyosaki's Rich Dad in real estate. My first courses will be Wholesale Buying in real estate and Lease Options. Later, I would like to take courses in Short Sales and Creative Financing. It appears that an LLC would be better for me than an S Corporation for better asset protection and might be better for other reasons. Since I am an Ohio resident, would you recommend that I incorporate with an LLC? Thanks.
A: I need a little more information before I can answer this question. What are you going to do with the real estate when you buy it? Are you going to resell it or hold it for investment? If you are going to hold it for investment, you definitely DO NOT want to use an S corporation. If, as I suspect, you are going to immediately resell the property, then you want to be formed as an LLC TAXED as an S corporation.
LLC’s have the asset protection advantage of a charging order. For more on charging orders and asset protection, go to our ProVision products page at www.provisionwealth/products, click on Tax Strategy Products, and go to our product entitled, “What You Really Need to Know About Asset Protection.”
You have a choice how to tax your LLC. You can tax it as a sole proprietorship, a partnership (if there are two or more owners) or a corporation. So, you can elect to tax your LLC as an S corporation. Make this election by filing form 2553 with the IRS. S corporations are particularly good for operating companies that only have a few owners. For more about what company to use in your business, go to www.provisionwealth/products, click on Tax Strategy Prodcuts, and go to our product entitled, “Entity Fundamentals.”
Warmest regards,
Tom
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