Should A Real Estate Agent Incorporate
There are many advantages to incorporating if you have the right guidance.
Should a real estate agent incorporate. As she makes more she can incorporate as a pc. The new entity an s corporation becomes your employer. In order to be a successful real estate agent you have to be entrepreneurial. This is why it is a good idea to incorporate your business.
New and experienced real estate agents alike should consider all of the benefits of incorporationespecially when it comes to taxes. Whether you are a real estate agent leasing and selling homes to customers or the owner of a rental corporation you have worked hard to get to where you are. Most agents make minimum wage or less to begin. Incorporating is a simple legal step in which you create a corporate entity which receives all income and pays all expenses.
Incorporating an established real estate agency all real estate professionals who are already operating successful agencies should consider incorporating as soon as possible. The limited liability protection can be very important even when its a requirement to pay taxes on the incorporated business entity every three months. If a real estate agent works for a broker as an independent contractor and receives a form 1099 from the broker for reporting of wages then that agent is responsible for paying 153 self employment tax on those wages to the irs along with regular income tax. You dont have the luxury and perhaps the boredom of going to the same place every day to perform the same function for a fixed time period and getting paid every two weeks.
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The main benefit in my opinion is to pay yourself a salary which is subject to ss tax while distributions from the corporation are not. Incorporating your real estate company offers a number of benefits for your business employees family and yourself. Some independent real estate agents incorporate their real estate business in order to help avoid an audit. Simply put you what you kill.
A major decision a business owner can be faced with is whether or not to incorporate. A realtor can easily incorporate through either an attorney or a qualified financial planner. A sole proprietor filing a schedule c are ten times less likely to be audited by the irs. In an article from january 2011 the wall street journal found that owners of incorporated businesses who file taxes with an s election under an llc or corporation structure vs.
This will especially true if the work is part time. As was identified in the article the main reasons real estate agents would want to formalize their business and incorporate are the related tax advantages personal asset protections and the overall increased credibility that comes from being incorporated.
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