Incorporating

[investinAK]

Could anybody shed some light upon the process of incorporating your company? I plan on flipping properties for cash flow as well as have some rentals-should I have separate entities for each "niche" (for lack of a better word)?

I have heard that is legal to incorporate in another state than which you are doing business in-is this true? I have found that the cost of incorporating in another un-named state is about 1/5 of what it costs in Alaska. Do you have to file through an attorney? Any info will be GREATLY appreciated!

Thanks!


Ryan

[malcolan]

Ryan,
I did some research a little while back, looking into various types of corporations. From what I can remember, you may incorporate in another state, but I think you have to have a mailing address in that state (this could be an attorney's office or similar).
Try this site, it has some information and will help you set it up if that's what you want.
http://www.corporate.com/index.jsp
Hope this helps.

--Andy :SM141:

[Aldo]

Forming an entity is nearly a requirement in this business. I'm just here to tell you not to even think about forming a C Corp. Out of necessity, I did that for personal reasons. The downside is the fact that the record keeping requirements are horrendous and I have 28 separate and distinct tax filings each year. There's more, but that should be enough.

I can say that Delaware, and possibly Nevada, allow people to incorporate in their state. There are companies (sorry, I can't name them) who will do the entire process for you. Included in their service, you are provided with a physical mailing address from which they will forward mail to your real address.

[investinAK]

The downside is the fact that the record keeping requirements are horrendous and I have 28 separate and distinct tax filings each year. There's more, but that should be enough.
I can say that Delaware, and possibly Nevada, allow people to incorporate in their state.

That is DEFINITELY enough to persuade me from forming a C corp! :) Luckily though, after the little bit of research I have done I have been leaning towards the S corp. I think Delaware is the state I found that charges about 1/5 of what we do, but I would have to look farther into that to be positive...

My main question NOW is this: should I form a separate entity for my rentals and my flips/rehabs, or should I just keep them in the same corp.?

Thanks for the posts guys!

[OzarkVU]

Ryan,
I just finished reading a book in the Rich Dad series. It's by Garrett Sutton, and called "Own Your Own Corporation: Why the Rich Own Their Own Companies and Everyone Else Works for Them". I found it to be very informative, and he explains the various entities available for use. I liked the LLC, but it isn't a one size fits all situation.

If I remember correctly, he recommends a separate entity for each property, but the book is not very expensive. You can read it yourself and get the info that you need.

Hope this helps.

Ed

PS I read of your recent loss in a different thread. My condolences to you and your wife.

[investinAK]

Thanks Ed, I will have to see if I can find that book at my local bookstore! Thank you for condolences, they are truly appreciated! :)

[Aldo]

I'd strongly suggest separate entities for your keepers and your flippers. I do not, and would not ever, suggest a separate entity for each property unless they are of high value and, at the same time, are high risk properties. Many owners will have different types of property and have two entities for the keepers. The higher end stuff goes into one entity, the lower-end props (usually higher risk) go into the other entity. With all of that said, I see no need for more than three entities. 1 - Flippers. 2 - High-end keepers. 3 - Low-end keepers.

As an aside, I'd suggest talking with your accountant about the +'s and -'s of each type of entity. Currently, LLC's appear to be preferred locally.