We often get asked by real estate agents if forming an LLC is right for them or is it just a waste of time and money. It is neither! In fact, forming an LLC as a real estate agent might be the best decision you could make for your business. Here's why:
1. Did you know that as an I-9 employee working under your broker that you are actually an independent contractor? Did you also know that as an independent contractor you are the sole owner of your personal real estate business?
If you are not incorporated as an LLC with the IRS, you could be personally liable for problems that arise in your business. This means that if a buyer contends that you personally misrepresented a structural issue with the property, or if the seller says your advertising was misleading or you offered legal advice about the sale that was deemed to be unauthorized practice of law, your personal assets, bank accounts and maybe even your own home could potentially be used to help pay off damages in a lawsuit!
Forming an LLC is starting to sound more enticing now isn’t it? Now, consider this...
2. Did you know that there are tax advantages for being incorporated as opposed to simply being a sole proprietor?
Incorporating with an LLC will give you important exemptions in self-employment tax that are not available to sole proprietorships. This is in addition to the numerous (and extremely beneficial) tax write offs that could offset your potential tax liability that you owe to the government every year. What’s even better is that if you’re itemizing your deductions, even the attorneys fees that you pay to set up your LLC and the cost of incorporating are DEDUCTIBLE!
3. Did you know that the majority of audits conducted by the IRS are done on sole proprietors who take too many deductions or their deductions don’t match the scrutiny of the various tax code standards? Fact of the matter is, LLCs are over 10-times less likely to be audited by the IRS than sole proprietorships!
What does all this mean? This information has both gotten me excited and scared all at the same time!
If you’ve read this far and have gotten to the point where setting up an LLC for yourself is something that you’re interested in, contact us today!. We’re licensed attorneys, focusing on Tax, Estate Planning, Bankruptcy and Small Businesses (like yours). We know the ins and outs of the Internal Revenue Code and have specialized degrees in Tax and Business Administration to help you and your small business succeed. We offer competitive rates and various payment options designed to fit your budget. Additionally, when you set up an LLC through our firm, the attorneys fees and Secretary of State filing costs are ALL DEDUCTIBLE!