by Michele Gillis, Staff Writer
How can Realtors structure their business so they're paying what they should to the government?
Here's some advice from John Miller of Rock Solid Business Law, who spoke at last month's NEFAR Ponte Vedra Council meeting.
"Many Realtors question whether it is better to structure their business as a sole proprietor, a corporation or a Limited Liability Company," said Miller.
"A sole proprietor just means you are not incorporated. You just pay taxes as in individual and will receive a 1099.
"A corporation goes all the way up to companies as large as Xerox all the way down to mom and pop companies.
"A limited liability company is a response to providing the liability shield of a corporation for smaller people who don't need to be so formal. You are not required to have the annual formality of annual minutes and you don't have to worry about losing your liability shield if you don't do those things.
"So, I am leaning these days, unless there is specific reason from a CPA, to advise you to be in an LLC."
After create your LLC, Miller said, you can start putting the PLLC initials behind your name to indicate you are a Professional Limited Liability Company.
"It looks nice, it's kind of new and it is also a conversation starter," said Miller.
Another plus, said Miller, is that you can choose a tax option that will keep you from getting taxed twice.
"You can choose a Subchapter S tax election and that means you are electing to be taxed one time," said Miller. "You are not subject to a self-employment tax, which will help you avoid paying extra money to the IRS."
Miller said that agents need to make sure they have their broker's permission before they file.
"I think it is more a practical matter of making sure the broker will pay the entity once formed," said Miller "I would also presume that a broker may be able to assist the Realtor in making sure proper procedure is followed in entity formation, but would respectfully suggest that contacting an attorney would be a wise course of action."
Also, you can only operate your entity in your name.
"The PA, LLC or PLLC may be incorporated only under the sales associate's legal name as registered with the Department of Business and Professional Regulation," said Miller." For example: John Johnson, PA."