If you're looking to build scale in your real estate investment business, operating as a corporation can provide helpful benefits. Corporations have formal requirements and regulations, but forming one properly positions you for limited liability, access to capital, and credibility when expanding your investments. Here's an overview of what's involved in structuring a corporation for real estate ventures.

Choosing a Corporation Type

When establishing a corporation for real estate, you'll need to file as one of these business structures:

- C Corporation (C Corp): A standard corporation that's taxed separately from its owners. Profits are taxed at the corporate level and shareholder level.

- S Corporation (S Corp): A corporation that passes income directly to shareholders to avoid double taxation. Limited to 100 shareholders.

- Close Corporation: A smaller corporation with limited number of shareholders. Operates similar to C Corps.

Each has different requirements regarding ownership, taxes, and operational processes. Many real estate investors opt for S Corps to benefit from pass-through taxation. But consult an attorney and accountant on the optimal structure for you.

Filing Your Articles of Incorporation

To form your corporation, you’ll file Articles of Incorporation with your state. This registration includes:

- Your business name and purpose

- Principal address

- Incorporator name (person filing docs)

- Number and type of authorized shares

The state filing fee is typically $100-$800 depending on your state. You'll also need to file periodic reports going forward.

Creating Corporate Bylaws

Bylaws provide the operating rules for your corporation's internal governance. Your bylaws should cover:

- Shareholder and director meetings

- Process for appointing directors/officers

- Shareholder voting procedures

- Stock transfer policies

- Record keeping procedures

- Amendment processes

Develop thorough bylaws with an attorney ensure smooth operations.

Issuing Stock

One of the main advantages of a corporation is the ability to sell stock shares to investors to raise capital. Your articles of incorporation authorize the total number and classes of shares your corporation can issue. Be sure to record all stock issuances and transfers properly.

Complying with Requirements

Corporations must meet requirements like holding shareholder/board meetings, recording meeting minutes, filing annual reports, and issuing shareholder dividends. Keep up with compliance to avoid penalties.

Properly setting up a corporation for real estate investment involves following key steps like choosing a corporate structure, filing articles of incorporation, creating bylaws, issuing stock shares, and staying compliant with administrative requirements. Structuring your real estate company as a corporation takes more upfront work but provides long-term stability. Following the proper steps outlined here will allow you to establish a corporate entity that provides an advantageous structure for your real estate investment growth.

About Us

The Stamps Real Estate Company is a locally owned and operated business and is proud to provide real estate services to investors interested in the Greater Memphis Area. Our team is made up of experienced Realtors® who understand the Memphis market intimately, and possess the expertise necessary to help investors buy, sell, and manage investment properties in the Memphis area.

Website- https://mymemphisinvestmentproperties.com/