The recent article by Incorporate.com Why Incorporate a Real Estate Business highlights the different advantages and reasons why an independent real estate agent should incorporate their real estate business. Any real estate agent that hasn’t yet incorporated their business should take the time to read the full article Why Incorporate a Real Estate Business.
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. These are very solid considerations for any new business venture but especially true for those working in the real estate industry.
Personal Asset Protection
All three are important factors to consider, but one that shouldn’t be overlooked is the need to protect oneself from liability exposure. The limited liability exposure that comes when one incorporates can protect you from someone coming after your personal assets, such as your house or money in your name.
We would also be remiss to not acknowledge the significant tax advantages with incorporating your real estate business. A key advantage is the ability to deduct so-called fringe benefits, such as medical insurance, travel expenses and other daily expenses. Another tax advantage is the ability to deduct losses for things that you might already be paying for. Also by incorporating real estate professionals can utilize their social security tax deduction.
Another reason that shouldn’t be skipped over is incorporating instills a higher level of credibility to a practicing real estate professional. Obviously when individuals are dealing with their real estate affairs they want to know that they are dealing with credible and trustworthy individuals and businesses. They want to know that if something goes awry that who they are engaged in business matters with is legitimate and going to be around.