Any business decision you make, especially directly related to your finances and business structure, should be made with a defined cost, benefit and purpose. The focus should be on maximizing your time and money by focusing on how much money you are saving versus the time it took to save that money. Some solutions seem advantageous, and are hyped up and do not lead to the savings or benefits promised when you implement them.
When you attend educational seminars or events, always consider how the company makes money (“Cui Bono”) and be sure that your goals are in alignment with their business goals. Companies profiting mainly from marketing and branding may not be offering you the most effective or pragmatic solutions.
Here are some of the biggest issues we see working with clients who have bought into some of the most common real estate education programs:
- Form a C-corporation
- Most “gurus” tell new investors to form c-corporation. Then they get killed on taxes and compliance. This is a legitimate strategy given the right circumstances, but particularly for new investors who are just starting out, this is almost always not worth it and leads to additional unnecessary costs.
- Deduct your passive losses
- Many real estate education seminars use the fact that real estate is a powerful tax planning tool as a talking point during the marketing presentations. They fail to cover many of the details that cost new investors significant amount of wealth at tax time. More on passive losses here: https://www.camusocpa.com/real-estate/real-estate-professional-status-a-cpas-perspective/#/
- Form a Nevada or Wyoming Corporation to save on taxes or protect assets
- If you are doing business in a state they are going to tax you on the profit you make. Additionally, if you need to register your company in your home state where you are doing business, the courts will apply your state’s laws when it comes to asset protection. There are specific instances when setting up in Nevada or Wyoming makes sense but this is a thoughtlessly oversold and overhyped strategy for real estate investors.
- Form an LLC to save taxes
- LLC’s are designed to provide asset protection. They are for holding assets or for partnership relationships between individuals or corporations. You can have an LLC treated as an S-Corporation or C-Corporation for tax purposes, but LLC’s help to minimize taxes.
We offer continuous access to top-tier tax, accounting, and finance services. We are building a community of entrepreneurial minded real estate professionals across the country.
Ongoing relationships with a CPA is what delivers the greatest value to organizations. Camuso CPA real estate memberships eliminates disincentives and unexpected fees for contacting your business adviser while eliminating the need for costly real estate education programs.
Our goal is to become your dedicated financial expert that is a fundamental part of your business. By integrating ourselves into your business on an ongoing basis we gain a greater perspective of your finances and can deliver more value in the form of time and money.
Our membership provides ongoing access to a financial expert focused on the real estate industry. We are building an organization that focuses on building long-term relationships with clients and developing a financially focused real estate community. We take the time and care to guide our clients and to deliver them valuable information, updates, and financial tools to optimize their business and expand their real estate financial knowledge focusing on traditional CPA services, ongoing support, and financial/real estate education.
Contact Us Today To Build Your Dedicated Financial Team and Receive Expert Real Estate Guidance: Charlote Tax Help For Beginning Investors.