If you are a real estate agent working as an independent contractor for a Sacramento real estate brokerage, you may be generally aware of the advantages of forming a solely owned corporation for your real estate sales business. Perhaps your CPA even recommended that you organize your real estate sales business as an S corporation to take advantage of favorable tax treatment. While a CPA is in the best position to advise you on your specific tax matters, you can trust a California business formation lawyer to explain why it’s important for real estate agents to consider business formation.
Payment of Commissions
As a real estate agent licensed by California Bureau of Real Estate (BRE), you are probably aware that it is unlawful to provide real estate-related commissions to an unlicensed person or entity under the California Business and Professions Code. Your first concern with forming a corporation may be that you will run afoul of this prohibition, since your entity is not recognized by BRE and you hold your license as an individual. Lawmakers anticipated this conundrum and resolved it, so that you can instruct your broker to pay your commission to a third party – such as your corporation.