Should I start my business before or after new year
Posted 20 November 2010 - 04:41 PM
I will most likely start a LLC but set up to be taxed as an S-Corp due to the tax advantages when doing C/A's and quick flips. But should I do it now and buy office equipment and have a lot of the startup costs and write offs done in this year or wait until the following year?
Thanks in advance.
Posted 20 November 2010 - 11:42 PM
Posted 21 November 2010 - 12:38 AM
But if I figured if I was going to start my company before I start investing and doing deals. Would it be better to start my company before the end of the year and have the normal start up costs and maybe some marketing costs. Or would it be better to wait until 2011. I don't know hardly anything about taxes, write offs, and business accounting.
So I didn't know if maybe there would be a cost benefit or tax benefit with one or the other. Or if it is minimal at best either way I go. I should probably just contact a CPA but didn't know if you guys had any real life expertise or suggestions one way or the other.
Posted 21 November 2010 - 12:49 PM
What sort of office equipment are you buying to get the business started? You've got a computer and access to the internet and I'd guess you've got a telephone... you really don't need much more than that to get up and running. All the rest is extra stuff that you really don't need at this point.
You can absolutely get a few deals done before the end of the year though there is a little bit of a learning curve when you get in to real estate investing. My vote is get started now and don't let taxes or LLC's or office equipment get in your way. Start doing some marketing, make some cold calls to get used to talking to sellers, try running the numbers on a bunch of properties to get the hang of figuring out values and stuff... It's not a difficult business to get in to, but it will take some getting used to and I know at least I learned a LOT from trial and error. There are 40 days left in the year, and there doesn't need to be really any start up or marketing costs unless you're jumping right in head first with expensive marketing and setting up an expensive (and unnecessary) office.
Start going after deals now and worry about write-offs and tax stuff in 2011
Posted 21 November 2010 - 11:20 PM
We are not in normal times. With the threat of higher tax bracket rates in 2011, business deductions might be more valuable to you next year.
Your call. Since the major portion of your start up costs will be the incorporation expenses, do you need the minimal business start up deduction this year?
As an aside, chances are you won't have any reportable income this year anyway. Even if you got a C/A assignment deal done this year, when will the property go to settlement so you can collect your assignment fee? I bet that won't happen until next year anyway because sellers usually don't like to move out of their homes during the holidays. In my opinion, having an s-corp in place this year won't give you any tax benefit over doing business for the rest of this year as a sole proprietor.
Additionally, if your income from your day job already maxes out your social security tax withholding, then the s-corp might not provide the tax benefit you are expecting. Consult a CPA to determine the business entity (if any) that works best for your circumstances.
Posted 21 November 2010 - 11:33 PM
I guess I will have to think about it, but I don't see myself getting more than possibly one or two deals done this year if any? So I might just try and do it in my own name this year and just file with my SOS with a origination date of 1 January.
If I do any deals in my personal name this year how would that affect my taxes this year as a single person?
Would that also have any affect on me setting up my business for the next year? Because right now I would be looked at as a sole proprietor without an entity, would I then have to create an entity as a sole proprietor instead of a disregarded entity with sub S-Corp status?
Posted 21 November 2010 - 11:52 PM
Because right now I would be looked at as a sole proprietor without an entity, would I then have to create an entity as a sole proprietor instead of a disregarded entity with sub S-Corp status?
A sole proprietor and a disregarded entity are taxed exactly the same. An s-corp is a completely different and distinct business entity. Suggest you get advice from a licensed professional before you incorporate on your own.
I suggest you start out as a sole proprietor. See if you like this business and can make money at it before you spend any money to incorporate a business entity.
Posted 16 December 2010 - 11:48 AM
Any office equipment you need to purchase (what don't you already have?) would be a capital expense and not deductible, but rather depreciated over five years.
I thought that equipment, etc., in your first year of business was deductible at 100% up to a certain amount. Am I wrong?
Posted 23 January 2011 - 11:19 AM
Posted 23 January 2011 - 03:37 PM
If you work as a sole proprietor in the beginning do you need to register a doing-business-as name?
You would for a separate bank account.
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