I have to set up payroll for a client who hired people to help him manage all his rentals. All his rentals are owned by LLC's, he also still has a dormant S-Corp that was used for house flipping before 2010. Payroll needs to be set up again anyway and I tend to use a LLC rather than this old S-Corp. Are there advantages of using the S-Corp.? I only see the disadvantage of corporate formalities. Either one will be 100% owned by my client.
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Originally posted by Gretel View PostI have to set up payroll for a client who hired people to help him manage all his rentals. All his rentals are owned by LLC's, he also still has a dormant S-Corp that was used for house flipping before 2010. Payroll needs to be set up again anyway and I tend to use a LLC rather than this old S-Corp. Are there advantages of using the S-Corp.? I only see the disadvantage of corporate formalities. Either one will be 100% owned by my client.Taxes after all are the dues that we pay for the privileges of membership in an organized society. - FDR
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Originally posted by Gretel View PostI have to set up payroll for a client who hired people to help him manage all his rentals. All his rentals are owned by LLC's, he also still has a dormant S-Corp that was used for house flipping before 2010. Payroll needs to be set up again anyway and I tend to use a LLC rather than this old S-Corp. Are there advantages of using the S-Corp.? I only see the disadvantage of corporate formalities. Either one will be 100% owned by my client.
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Wouldn't the property managers be IC's or is the owner controlling all of their participation? Couldn't he be an LLC (Parent company) disregarded entity and file a Sch C issuing 1099's to the managers? I find many reasons to file Sch E's independently for each rental rather than lump them into one. Does he qualify as an RE professional by doing the LLC?Believe nothing you have not personally researched and verified.
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I think I need to clarify the issue. Each property is owned by a different LLC and managed by a management company. This will not change. Part of the profits from each of the LLC's will be used to pay employees for services that are beyond regular management company activities. They are under total control of my client and are certainly employees, which is not the issue here. The "parent" company (no matter if the S-Corp. or a new LLC) will have income from each of the existing LLC's for these additional management services.
The question is if it makes a difference from the tax perspective using a S-Corp or a LLC.
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Originally posted by Gretel View PostI think I need to clarify the issue. Each property is owned by a different LLC and managed by a management company. This will not change. Part of the profits from each of the LLC's will be used to pay employees for services that are beyond regular management company activities. They are under total control of my client and are certainly employees, which is not the issue here. The "parent" company (no matter if the S-Corp. or a new LLC) will have income from each of the existing LLC's for these additional management services.
The question is if it makes a difference from the tax perspective using a S-Corp or a LLC.
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Using an otherwise inactive corporation to pay employees who don't even work for it would be awkward at best. I assume each of the LLCs is a SMLLC, so everything gets reported on the owner's personal income tax returns anyway ... on Schedule E. Why doesn't he just treat himself as the employer? After all, he is, isn't he?Roland Slugg
"I do what I can."
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Originally posted by Roland Slugg View PostUsing an otherwise inactive corporation to pay employees who don't even work for it would be awkward at best. I assume each of the LLCs is a SMLLC, so everything gets reported on the owner's personal income tax returns anyway ... on Schedule E. Why doesn't he just treat himself as the employer? After all, he is, isn't he?
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