How To Setup Your Business For Wholesaling Real Estate
Oon this video we are going to be talking about your business setup. Should you be an LLC? Should you be an S corp? What does it all mean? How does it protect you? And how do you save money in taxes? Check it out…
𝐉𝐨𝐢𝐧 𝐎𝐮𝐫 𝐏𝐫𝐢𝐯𝐚𝐭𝐞 𝐅𝐚𝐜𝐞𝐛𝐨𝐨𝐤 𝐆𝐫𝐨𝐮𝐩
What’s up guys, welcome back to my channel. I am Justin Colby. And on this channel, we talk all things business, real estate and entrepreneurship. Today, we are going to review how to set up your business structure. And I do it primarily for tax reasons as well as protection. But I want to save more money on taxes. So let’s get going. I get asked this almost more than anything else is do I need a website? Do I need business cards? Do I need an LLC? What structure should I be running my business? And so I just want to address all of these right here for you today. First and foremost, when it comes to your entity name. Most people overthink this people start to worry about oh you know what, what should my name be and they put too much thought into it they get too creative in the reality is this as a real estate investor, 99.9% of us including myself are gonna remain a mom and pop shop. Even if you are doing 20 plus wholesale deals a month like I am, you’re still relatively a mom and pop small little business relative to the big boys like Zillow and offer pad and open door. And you can even talk about Blackstone and invitation homes and all these other multibillion dollar companies. We’re little guys, right? We might make a couple million dollars a year at best. But you are overthinking the name. And the reason why I’m even bringing this to highlight think about the name of the little guys offer pad open door. Like Zillow, it’s irrelevant. like think about the name of In fact, this apple, like don’t overthink this part. Name your entity, whatever you want. Don’t put this big branding behind it. I think this is one of the keys. I see people like getting ready to get ready. And the reality is just start taking action. Alright guys, if you are liking this, I want to make sure you smash the like button, hit the subscribe button and turn on your notifications. As I talk all things business, real estate and entrepreneurship. This is specific for you real estate investors. Now where can you find if your name is available? Let’s start there. Well, the first place and it can be different in different cities. But you want to look at the Secretary of State’s website or the Corporation Commission. To my knowledge, those are typically the two areas that you are going to find your entities. So typically, when you go to their website, you can actually go in, they’ll do like an entity search very simple, you just simply search and if it’s available, then you can absolutely take that as your entity name, do not overthink it, okay, the only piece of advice I would give you here is I would not put my name or my family’s name or my last name into the actual entity name, I would really just make it an investment company, a holding company, a wealth building company, you can name it whatever you want, but I typically wouldn’t put any personal name within the title. So now that we talked about finding the name and where you want to go secretary or state, or the Corporation Commission, now let’s talk about potentially what structure of business do you want. Now this is really, really, really where you need to talk to your accountant, because at the end of the day, the structure, meaning LLC, or S corp, or limited partnership, or partnership or sole proprietor, C Corp, those are all essentially ways that the IRS will tax you. Right. And so that’s really what it is about is your tax liability, depending upon the structure. So what I have done, and I’m gonna give you guys what my accountant has asked me to set up all of my entities with, which is LLC first. So I get a limited liability corporation. Right. And I own the LLC, through an S Corp. S corp, who is the managing member and owner of the LLC, and then I own the S Corp. That is how my accountant asked me to set up all of my entities and that is how I would suggest anyone to do so. Now again, I really want everyone to go speak with their accountant, verify this is the accurate information for you and how you’re going to run your business model. It If you are someone who’s going to be buying a bunch of rentals, I essentially would also create LLCs. For packages of rentals, right, I have a separate LLC that I’m buying my rentals in. And then when I buy a certain amount, call it five to 10, then I’ll create another LLC to continue buying rentals in, then then I’ll be able to put those rentals into a trust. And I’m not going into that right now. But I want you guys to understand the LLC owned and operated by an S corp, which is the managing member, and then that is owned and operated by me personally, ultimately, is built instruction way to help me save on taxes. That is why now a lot of people go down this path Well, yeah, but it’s protection for you to you know, the, they’re never gonna be able to find you since it’s owned and operated by an S corporation, etc. And you have less liability if you were to ever get sued. While that is very true, it is shielding you from in protecting you from lawsuits. Ultimately, the structure itself is much more, for me at least much more for tax reasons than anything else, I save roughly about 14%. In taxes structured like that, again, that is specific to Arizona. And so I’d ask you to ask your accountant about that. Again, LLC, owned and operated managed by an S Corp. And you can own and operate the escort, you can find the entity name on the secretary of state or corporation commission. And once you do that, you can go apply online. Honestly, the COVID scenario really made all of this very, very simple to do right there online. For those of you in Arizona like myself, the Corporation Commission just offers you a quick application, and you fill out the information and submit it. And it costs there is a fee to start an LLC, you submit payment, and you can be up and operational within less than 14 days, the most recent LLC was like roughly about 10 days, we were up and operational. So it’s very, very simple. Don’t overthink This, again, this is all about taking massive action, get started get going name is irrelevant. I want you guys to get an LLC S corp managed by you. Now again, this is how I’ve set mine up based from my accountants information, check with your accounts. Now, when it comes to business cards and websites. While I know it feels like you want to be an official business, I want you guys to all slow down and not worry about that part. Again, this is going to be a relationship business. And so while Yes, handing someone a business card can be good. Ultimately, if you’re in front of them, here’s my business card. I actually exchanged phone numbers and I exchanged content right there. I’m not worried about passing out a card because what do you do with business cards? Do the same thing I do I throw them away. That’s what happens. So I’m, I’m not the person that is going to worry about my business cards. If I’m going to exchange information, I’m going to do it right then and right there. And I’m going to say hey, why don’t I shoot you a text message real quick, we exchanged numbers, and then we’ll be in contact here shortly. That’s how I would exchange that. So don’t worry about your business cards. In terms of your logo. You know how easy it is to go on fiverr.com fi ve RR com, find someone to design a quick logo for you at the cheap like 20 bucks. It’s super easy. Again, don’t overthink your logo, something with the house design on it is totally fine, you will probably get someone to design one for less than $20 fiverr.com is the resource I would use there in Lastly, websites. While I appreciate people that feel like they need to have the website as a staple to their business. I’m not overly worried about having a website. However, if you do need a website that would encourage you to go use investor carrot, investor carrot, it has about four websites for me, by the way, essentially don’t use them. Although they do. And they’re very inexpensive. And it gives you a very professional feel specific to being an investor. If you use the promo code t s o f, they will hook you up. So again investor carrot, use the promo code to see if they’ll hook you up. But I also don’t want you to overthink that I believe I spent about $97 a month on my websites over at investor carrot, they are the best there should not be another place that you go. Investor care is the very best there. But again, I would tell you, this all becomes secondary to you actually going out and taking action based around all of my coaching and advisement that I’ve given you to go get a deal. Even if your first deal is in your personal name. That is totally fine. That just means you’re going to be paying more taxes than if you’re set up any different entity but at the end of the day, wouldn’t you rather pay $4,000 in taxes because you made $10,000 getting your first deal done? I sure would. Right. So this is about you taking the action to go get your first deal first. Getting your LLC set up getting your S corp, that is all important. The business card and the website that comes secondary or, or you know, way down the line. In my humble opinion, I wouldn’t worry about it as much. Alright, so the focus here, go get your first deal. Get your LLC set up, get your S corp, make sure you are running, don’t worry about your cards. Don’t worry about your website as a moment in time. Although if you need the website, investor care, it’s a great spot. Alright guys, so that is it. Listen, this is simple. I want you to take action, make sure you’re doing it the right way, make sure you’re talking to your accountant. If you’re interested in having me hold your hand to not just get started but also potentially scale your wholesaling flipping business, simply go over to the science of flipping.com fill out a very, very simple form. And then some of my top advisors will talk to you see if we would be a good fit for you and if you’d be a good fit for me. And then if so, I’m happy to guide you through the process and give you the exact blueprint on how I’m doing 20 plus wholesale deals every single month in six different states and eight different markets. Just go to the science of flipping.com fill out a very simple form. And I look forward to seeing you guys on the next video. Peace.