Newbie Question
I am planning on starting a commercial real estate investment company. I will be focusing on Class B and C apartments to buy, fix and rent out and/or sell. I am wondering what type of legal entity would work best for this type of business. C-corp? S-Corp? LLC?
[{"id": "dqwl7na", "text": "If it's a sole proprietorship an LLC will be fine. I'm not an attorney and your mileage may vary.", "replies": [{"id": "dqwqn4j", "text": "Your state May differ, but a sole proprietorship and an LLC are two different things. One is not a legal entity (it's just you); the other is a legal entity (you are separate from the business). \n\nThat said, the difference between LLCs and corps normally come down to tax advantages. Speak to your CPA about that. ", "replies": [{"id": "dqyh8pd", "text": "True, I was assuming he currently has a sole proprietorship. The LLC would allow him a greater ability to shield his personal assets from business debts and allow him some tax deductions he couldn't get before. \n\nIf there were any other share holders in a business I was starting I'd opt for an S Corp. ", "replies": [{"id": "dqyocrt", "text": "Oh I see what you mean", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "dqwvaj7", "text": "Depends on how big the apartments are I guess. Usually each apartment is owned by its own LLC, that way if one goes bust they cannot bring down the entire company. \n\nYou have to pay $800 a year plus other various costs to set up the LLC's, and each LLC usually ties back to an attorneys office, making getting to you the actual owner harder to do in case anyone is looking to sue. \n\nDepending on how much money you can put together, you may look at forming a REIT, since that has significant tax advantages over the others. ", "replies": [{"id": "dqwx54h", "text": "Depends on the state. LLC in Texas for example only cost 300 bucks ", "replies": [], "depth": 2}, {"id": "dqy4yv5", "text": "&gt; you may look at forming a REIT\n\nIsnt the hardest part for a small operation like OP's is  gettting atleast 100 shareholders plus having  five or fewer individuals not owning more than 50 percent of the value of the REIT's stock? ", "replies": [], "depth": 2}, {"id": "dqypk3k", "text": "Although there can be tax advantages, REITs are heavily regulated and have very strict requirements that aren't going to be plausible for a new business like this. They usually only make sense for larger operations.", "replies": [], "depth": 2}], "depth": 1}, {"id": "dqypgy2", "text": "Any of those should protect you from a liability standpoint, the bigger question is tax implications. You should ask your CPA which entity will likely have the best tax consequences for your specific business.", "replies": [{"id": "dqywtkf", "text": "My CPA is saying I should form a LLC and be taxed as what the IRS calls a Disregarded Entity or a Single Member LLC.", "replies": [{"id": "dqz6cb0", "text": "Well there you go!", "replies": [], "depth": 3}, {"id": "dr2z991", "text": "This is very normal. Good luck, apartment investing is pretty competitive where I am. ", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}]