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LLC Or Sole Proprieter?

 
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Old 03-27-2010, 03:14 PM   #1
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LLC Or Sole Proprieter?


Ive been working as a sole proprietor for the past 2 years. I have been thinking about switching to a LLC for the purpose of getting loans easier to flip houses. Anyone have any experience in this? IN PA. (I have read / been told, mortgages are attainable by credit score alone and not w-2's)
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Old 03-27-2010, 05:25 PM   #2
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Re: LLC Or Sole Proprieter?


You missed the boat by a few years.

There are good reasons for using an llc over being a sole proprieter, but its not going to make getting a mortgage any easier.

I do not believe there are any mortgages available just due to having a good credit score. You also need two years tax returns showing enough income and a decent debt ratio.

If you have owned several properties for a couple years you may have more options both with using rents as income and getting different types of loans.

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Old 03-27-2010, 05:49 PM   #3
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Re: LLC Or Sole Proprieter?


Pa laws are not in your favor. I would not consider any other corp but an s corp for tax reasons. Makes no difference as far as financing what you are your still going to personally back up the note.
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Old 03-27-2010, 05:59 PM   #4
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Re: LLC Or Sole Proprieter?


Quote:
Originally Posted by SWConstruction View Post
(I have read / been told, mortgages are attainable by credit score alone and not w-2's)
and I have this nice bridge over here....I'll sell it to ya cheap...
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Old 03-28-2010, 11:48 AM   #5
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Re: LLC Or Sole Proprieter?


Really look into an S Corp, when you compare other things like taxes and liability issues this made the most sense to me.
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Old 03-28-2010, 12:21 PM   #6
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Re: LLC Or Sole Proprieter?


I recently converted a C to an S. Best thing I ever did
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Old 03-28-2010, 02:12 PM   #7
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Re: LLC Or Sole Proprieter?


Ill look into an S corp... Its hard to flip houses when you write off all your income :]
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Old 03-31-2010, 01:52 PM   #8
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Re: LLC Or Sole Proprieter?


We set up as a C corp. Main reason was liability. According to several attorneys, that form gives an individual the maximum liability shield. Yes, there is a tax issue for a C corp, but it has not proved to be too bad if you account for it.

Can someone "pierce the corporate veil"? Sure, but it takes a lot more time and money to do so. If you always do things as the corporation, it's extremely hard to do so.
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Old 03-31-2010, 02:03 PM   #9
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Re: LLC Or Sole Proprieter?


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Originally Posted by DBBII View Post
We set up as a C corp. Main reason was liability. According to several attorneys, that form gives an individual the maximum liability shield. Yes, there is a tax issue for a C corp, but it has not proved to be too bad if you account for it.

Can someone "pierce the corporate veil"? Sure, but it takes a lot more time and money to do so. If you always do things as the corporation, it's extremely hard to do so.

S corps and C corps offer equal protection. That siad, with enough money and time they can be pierced
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Old 04-01-2010, 06:11 PM   #10
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Re: LLC Or Sole Proprieter?


You're right -- the S and C is a tax issue.

The reason I was told not to file as an S corp is that it made the company LOOK a lot more like a sole propriatorship.
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Old 04-01-2010, 06:42 PM   #11
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Re: LLC Or Sole Proprieter?


This is complicated but to put you on the right track... For owning a home for "business purposes" go with a LLC that is created to own that home only. If needed roll up each LLC into an S Corp umbrella company. That way if you get sued then all they can take is that home not everything else you have.

Sole Proprietor offers you no protection for any of your assets. And trust me if some dufus is walking past your house, trips over your hose or a piece of dog crap then they will sue you for their newly created permanent back injury etc.

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