正文
Once your income and asset reaches certain level, build a corporation as a tax/liability shield is the next step, especially if you have business such as rental units.
Consult your CPA for tax advantage. You can charge a lot of your daily expense to the corporate so you can avoid tax on those expense. Such as car lease, travel expense (go to a real estate related meeting in Hawaii), big meal in restaurant(dining with client, whom happen to be my 3-year-old daughter and husband), milage(rental maintainance) and so on. You need to retain all records in case you get audited by the IRS. And PLEASE hire a CPA with good reputation, a good CPA will give you correct advise and also significantly lower your chance of getting auditted.
Use it as a liability shield, this will give you an idea on how much asset you want to put under the corporation. For example, the corpoation is sued by one tennant and the court decides corporation is liable for a huge amount of money. The tennant can only go after the corporation itself, ie. the rental house, the car, but nothing against your personal belonging, such as your own house or the car under your own name. For the better, the corporation can go bankrupt without affecting it's founder's credit score (not saying we want that to happen). Putting some asset under corporation is a great advantage for tax reason, but it is subject to corporation's liability.
The disadvantage of corporation is cost and time. You need to maintain all records of spending, meetings, related mileage and so on. And you need to pay administrative expense for corporation such as attorney fees and state fees.
There are 3 types of corporation in California: Inc, S corporation and LLC. Each of them has its own charactor, so do your research online or in bookstore and choose the one fits you best.
For more animated discussion, the book "Rick dad, poor dad" has some very intereting points. I agree with most the author is saying, because he gets the big picture, and it's very worth exploring.
Consult your CPA for tax advantage. You can charge a lot of your daily expense to the corporate so you can avoid tax on those expense. Such as car lease, travel expense (go to a real estate related meeting in Hawaii), big meal in restaurant(dining with client, whom happen to be my 3-year-old daughter and husband), milage(rental maintainance) and so on. You need to retain all records in case you get audited by the IRS. And PLEASE hire a CPA with good reputation, a good CPA will give you correct advise and also significantly lower your chance of getting auditted.
Use it as a liability shield, this will give you an idea on how much asset you want to put under the corporation. For example, the corpoation is sued by one tennant and the court decides corporation is liable for a huge amount of money. The tennant can only go after the corporation itself, ie. the rental house, the car, but nothing against your personal belonging, such as your own house or the car under your own name. For the better, the corporation can go bankrupt without affecting it's founder's credit score (not saying we want that to happen). Putting some asset under corporation is a great advantage for tax reason, but it is subject to corporation's liability.
The disadvantage of corporation is cost and time. You need to maintain all records of spending, meetings, related mileage and so on. And you need to pay administrative expense for corporation such as attorney fees and state fees.
There are 3 types of corporation in California: Inc, S corporation and LLC. Each of them has its own charactor, so do your research online or in bookstore and choose the one fits you best.
For more animated discussion, the book "Rick dad, poor dad" has some very intereting points. I agree with most the author is saying, because he gets the big picture, and it's very worth exploring.
评论
目前还没有任何评论
登录后才可评论.
