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Hello, my name is Samir Bhatia with BW Group. We are a CPA firm specializing in small businesses and high-net-worth individuals, with a primary focus on real estate. You’re in the right place to get some crucial information on how to operate your business once your LLC is set up. Let’s jump right into it.
Winston Churchill said it best: “He who fails to plan is planning to fail.” It’s crucial to create a plan to set your business up for success. When you visit our office, we divide your financial life into two categories: short-term (active and ordinary income) and long-term (passive income).
Short-Term and Active Income:
We recommend setting up this side as an S corporation for tax purposes.
Long-Term and Passive Income:
For passive income, consider a partnership LLC or a single-member LLC for better protection.
Once your LLC is set up, the next steps are crucial:
Cell Phone Expenses: To deduct 100% of your cell phone bills, have a separate line for personal use. You can use a Google line for personal calls, which is free.
Health Insurance: Your health insurance should be a business benefit. However, don’t pay for medical bills with your business account. Treat medical expenses as out-of-pocket costs, just like you would with a W-2 job.
We’ll cover this more in a separate class, but here are the basics:
Good records are crucial, especially for travel, meals, and entertainment. Here’s how to keep track:
Using business accounts for personal expenses can cause major issues if you’re audited. An IRS agent will scrutinize every transaction if they find personal expenses mixed with business ones. They may even revoke your S corporation status based on improper use of funds.
Ssetting up and maintaining a successful real estate business requires meticulous planning and disciplined financial management. By distinguishing between short-term active income and long-term passive income, choosing the right business structure, and keeping your personal and business finances separate, you can maximize your tax benefits and protect your assets. Implementing proper record-keeping practices and understanding the nuances of business expenses will further safeguard your business from potential IRS issues.
At BW Group, we’re here to help you navigate these complexities and set your real estate ventures on the path to success. Remember, a well-planned strategy is the key to achieving your business goals.
Get started with Propelio and unlock all the tools you need to succeed in real estate. Sign up now for a 14-day FREE trial: Start Free Trial
Get started with Propelio and unlock all the tools you need to succeed in real estate. Sign up now for a 14-day FREE trial: Start Free Trial
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