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MistiJ
Joined: 10 Jul 2005
Posts: 3
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 Posted: Mon May 14, 2007 7:46 pm Post subject: Should I create 2 businesses? One for store & one just for r |
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| I’m currently renting a retail space for my store and am now looking to purchase commercial real estate to run my store in. I was advised to create a new business (such as “Last Name Properties”) just for the real estate and basically pay myself rent from my current business. Does anyone have any experience or an understanding of how this may be advantageous? |
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bulabate
Joined: 18 Sep 2005
Posts: 6
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| Posted: Wed May 16, 2007 1:03 am Post subject: Should I create 2 businesses? One for store & one just for r |
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| you sound like ur goin all the way |
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kjtniny
Joined: 06 Apr 2007
Posts: 6
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| Posted: Thu May 17, 2007 6:20 am Post subject: Should I create 2 businesses? One for store & one just for r |
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| cut your expenses and get paid |
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bostonianinmo2011
Joined: 14 Oct 2004
Posts: 3
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| Posted: Fri May 18, 2007 11:37 am Post subject: Should I create 2 businesses? One for store & one just for r |
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| The advice you got is sound in terms of if, God forbid, one goes bankrupt. One still will earn income and the other will take a loss. That means asset on one cannot be take from the other if they are separate entities.The only problem there is just there are lots more paper work for taxes and all. But financially, it is better in the long run. |
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gabivat
Joined: 22 Jun 2007
Posts: 2
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| Posted: Sat May 19, 2007 4:54 pm Post subject: Should I create 2 businesses? One for store & one just for r |
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| Don't forget about income taxes! You'll end up having to pay tax on all the money you're "paying" yourself. Just a thought... |
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SanDiego21
Joined: 25 Feb 2007
Posts: 2
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| Posted: Sun May 20, 2007 10:10 pm Post subject: Should I create 2 businesses? One for store & one just for r |
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| that's more for tax reasons it sounds like |
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ajoppru
Joined: 07 Jan 2005
Posts: 8
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| Posted: Tue May 22, 2007 3:27 am Post subject: Should I create 2 businesses? One for store & one just for r |
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| The reason to form an entity for your business is to limit the liability if you are sued or if the business fails. You want to have the real estate outside of that business so that you don't loose it if you are sued or the business fails. You should set up an LLC or a corporation to own and operate the business and then own the real estate personally. The business would pay rent to use the real estate and that rent would be income to you. If it is a pass through entity, such as an LLC that elects to be taxed as a partnership or an S Corporation, then it has no net tax effect to you. The rental income is offset by the rental expense flowing out of the pass through entity.Good luck with your business.Jim Kirby, CPA/PFS, CFP, CFS |
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