S-Corporation for real estate investors

S-Corporations can help some investors save on their taxes, sometimes to the tune of thousands of dollars.

Royal Legal Solutions can help you determine whether an S-Corporation is best for you. If so, we will help you establish your S-Corporation and advise you of its many benefits.

What Is an S-Corporation?

An S-Corporation is so named because it is defined by the IRS’s subchapter S. To receive this status, a business must meet a few key rules. This type of business must be physically located in the U.S., and its owners must meet residency requirements. S-Corporations may have up to 100 shareholders and conform to other regulations regarding payroll.

Common Misconceptions About the S-Corporation

An S-Corporation is not an entity, but a tax status. Many investors get confused on this topic because a C-Corporation is a type of entity and S-Corporations are often mentioned alongside entities. We suspect this is the source of the confusion.

Tax Benefits of S-Corporations

Most investors who elect to use S-Corporations do so for the tax benefits. Owners are exempt from federal corporate income tax, and are instead taxed at a flat rate that is substantially lower than the standard C-Corporation tax.

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WILL AN S-CORPORATION HELP MY REAL ESTATE BUSINESS?

An S-Corporation may be a great asset for your business that protects your assets and saves you plenty in taxes. Of course, to reap these benefits it must be professionally created and also the most suitable structure for you. Filing as an S-Corporation isn’t always ideal. As with all things asset protection, there isn’t a one-size-fits-all solution. Every tool that has benefits will naturally have drawbacks as well.

For instance, a Series LLC may be a more appropriate structure for a beginning investor making their first few deals. The S-Corporation is inherently more complicated from an operational standpoint and might be overkill for say, the investor who is starting out with their first rental property and operating with less capital, knowledge, and experience. Yet it’s a great organizational tool for larger companies needing a tax shelter, asset protection, and stocks.

The key factors in determining whether S-Corporation status will help you include everything from the size of your company, revenue, and of course, your personal ambitions. As with any tool, we will always ask whether it’s appropriate for your needs. Our pledge to you is to listen carefully, evaluate your situation in detail, and offer the most effective tools for your stated goals.

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Key Benefits of the S-Corporation Tax Designation

Learn more about the other benefits of pass-through taxation, and why 90% of businesses that can pass-through their income do.

THERE ARE MULTIPLE POSSIBLE BENEFITS OF THE S-CORPORATION

Most of them, naturally, relate to taxes, but there are many ways to use this structure in your favor. Here are the top four benefits of using an S-Corporation.

#1 TAX FREEDOMS

When you use an S-Corporation, you aren’t obligated to pay federal income tax or corporate taxes at all. It can also be structured to minimize or avoid the self-employment tax altogether. Distributions, for instance, are exempt.

#2 PASS-THROUGH TAXATION

S-Corporations allow profits and losses to “pass through” to the personal tax returns of the shareholders. This makes filing your personal taxes simple.

#3 LIMIT LIABILITY, STRENGTHEN YOUR ASSET PROTECTION PLAN

An effectively structured S-Corp paired with an entity can limit personal liability and the liabilities surrounding your real estate holdings. S-corp taxation works effectively alongside other asset protection tools, and can even be applied to Series within a Series LLC.

#4 PERSONAL ATTENTION FROM OUR EXPERTS

If you have questions about any of these S-Corporation benefits or want to learn even more, speak with one of our asset protection advisors today. We’re happy to explain our products in greater detail, and as they relate to you, at any time.

Visit our S-Corporation Knowledge Base 

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THE ROYAL LEGAL SOLUTIONS ADVANTAGE

If you suspect S-Corporation status would benefit you, reach out to talk to one of our experts today. Our Asset Protection Advisors are carefully trained to help you select to most appropriate types of legal tools for your situation.

With so many business structures to choose from, you want to get your real estate business off to the best possible start. Reach out now with any questions or simply to explore your options. Royal Legal Solutions is committed to helping you build the best real estate business possible.

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