What’s the best way for investors wholesaling homes to register themselves as a legal entity?
Whether you choose a C or S Corporation or organize as a LLC, where should you register it, how much should you pay, what help might you need and what aren’t you being told? best LLC services 2021
For those wholesaling homes there is really no excuse for not forming a legal entity to do business under (or a dozen of them). Pinch your pennies if you will but the bottom line is that any wholesaler that is serious about maximizing profit and staying in the real estate game for more than a few months really can’t afford not to formalize their businesses.
Where most real estate wholesalers get hung up is on the initial decision of what type of entity to file as. Should it be a C or S Corp or an LLC? The truth is that every professional you talk to will likely provide you with a different answer and some pretty good arguments to back it up. Just don’t let this hold you up. You can switch between S and C corporation status after filing and LLCs do the job just as well for most. Just get it done for the privacy and liability reasons fast and then make your tweaks. Otherwise you might not even still be in business when tax time comes around next year.
The second frustrating dilemma that causes many to put it off is how they should file. Today you can choose between filing directly with the state online, using a third party service online or going the traditional route of having a law firm handle it for you. The decision may somewhat depend on how many people are involved and how much money is on the line, but again, don’t allow small hurdles to hold you back. Of course the best way to go is probably to hire the best possible attorney you can afford and have them create a thorough set of documents and keep them on active retainer. However, those just starting out and on Ramen noodle style diet might just get away with filing online directly with the state for the time being. This can generally be done in less than 5 minutes, for around a couple hundred dollars. Then a tax identification number can be obtained directly online in the same amount of time as well.
Then it’s time to choose where to incorporate. There can be huge advantages to choosing to organize offshore. However, recognize that those advantages are being eroded and the famous old tax havens of the past provide very little protection today. If you will be doing business nationwide then you might consider organizing in another state that is less expensive, offers better tax rates and more privacy.
Just as, if not even more important than the above is maintaining your company after filing in order to retain all of its benefits. This includes keeping up with filing requirements for meetings, annual renewals and being sure not to comingle funds.
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