When you start investing in real estate, one of the biggest questions that comes up is: Should I form an LLC or S-Corp? The answer depends on your goals, but understanding the differences can help you make a smarter decision.
The Case for an LLC
An LLC (Limited Liability Company) is one of the most common structures for real estate investors. It’s flexible, simple to manage, and—most importantly—protects your personal assets. If something happens on the property, your personal savings or home aren’t at risk.
Tax-wise, LLCs are typically treated as “pass-through” entities, meaning income and expenses flow directly to your personal tax return.
When an S-Corp Might Make Sense
S-Corps can be beneficial for investors running an active real estate business, such as flipping or short-term rentals. They may help reduce self-employment taxes, though they come with stricter compliance and payroll requirements.
Why Your Structure Matters
The right entity impacts how you’re taxed, how you can raise capital, and how easily you can sell or pass down properties. For many Los Angeles real estate investors, starting with an LLC and evolving to a different structure later makes sense.
The key is to choose a setup that aligns with your risk level, number of properties, and long-term financial goals.
Holmes & Associates helps real estate investors across Los Angeles and Long Beach set up the right entity structure for growth and tax efficiency. Schedule a call to discuss your options.