Should I Form an LLC, PA, S Corporation? | Real Estate Agent & Realtor Legal & Tax Edition

This video is for Real Estate Agents and Realtors who want to form a legal entity and save money on taxes. I discuss the Sole Proprietorship, LLC, PLLC, Corporation (including S Corporations) and the PA (Professional Association) both from a Legal and Tax perspective. I also discuss what a Professional Limited Liability Company and why it may be better for you than a Professional Association.
If you're ready to form your business, I've partnered with the following companies. Use the links below as some of them include coupon codes to receive up to $100 off their services:
Inc Authority: bit.ly/incauthoritycoupon
IncFile: bit.ly/incfilecoupon
Zenbusiness: bit.ly/zenbusinesscoupon
BetterLegal: bit.ly/betterlegalcoupon
Note: The due dates for when to file the various tax documents have recently changed...they are as follows:
Sole Proprietorship: April 15th
S Corporation: March 15th
Partnership: March 15th
C Corporation: April 15th
I created this video because there is a lot of misinformation out there on KZbin and other various channels and it’s crucial you do this correctly when you start your real estate business.
Take what you learn from this video and ask your legal or tax professional all of your specific questions. If you want to contact me, my information is below.
If you learned something from this video, please like and subscribe and follow me on my various social media handles below. If you would like to contact me with a specific question, please visit my website or leave me a comment.
Visit FileYourBusiness.com to educate yourself on other requirements for legal entities and to learn more about Registered Agents and Annual Reporting requirements: www.fileyourbusiness.com
Website: www.navimarajcpa.com
Email: [e-mail]
Phone: [phone]
Instagram: / navimarajcpa
LinkedIn: / navi-maraj-cpa-78b9b250
Twitter: / navimarajcpa
Facebook: / navi-maraj-cpa-pllc-10...
This video was created for informational purposes and it is not to be construed as legal and tax advice specific to your unique situation.
© Navi Maraj CPA PLLC. All rights reserved.

[@NaviMarajCPA]

If you're ready to form your business, I've partnered with the following companies. Use the links below as some of them include coupon codes to receive up to $100 off their services: Inc Authority: bit.ly/incauthoritycoupon IncFile: bit.ly/incfilecoupon Zenbusiness: bit.ly/zenbusinesscoupon Northwest Registered Agent: bit.ly/northwestregisteredagen... BetterLegal: bit.ly/betterlegalcoupon Note: The due dates for when to file the various tax documents have recently changed...they are as follows: Sole Proprietorship: April 15th S Corporation: March 15th Partnership: March 15th C Corporation: April 15th Let me know if you have questions!

[@RichFlemingRealtor]

The best video I've seen on this topic for Realtors! Thanks!

[@kylehively2364]

Great information, thank you for making the video!

[@guillermomiranda330]

Great info! Enjoyed the video. Thank you!

[@AniciaAcosta]

Thank you so much for this video. It was super helpful!!

[@kristinetrckarealtor842]

OMG! Thank you so much for finally explaining this so we can understand! Heading to watch your other videos now! Thank you thank you thank you!

[@NaviMarajCPA]

Hi Kristine! Thank you for watching and for the feedback. Hope you learned a ton and can now save thousands on your taxes!

[@jessesutton6991]

Thanks, Nav! I just passed the Florida Real Estate exam, and I am setting up my LLC now.

[@Marlon.Persaud]

So glad I found your channel!!! Awesome detailed explanation!! Thank you! 🙏

[@NaviMarajCPA]

Thanks Marlon! I’m glad you found it too!

[@rominaperagine72]

Thank you for this great video, very clear, I finally found answers of many questions I had.

[@NaviMarajCPA]

Thank you Romina - I appreciate the feedback!

[@dynastyvazquez1536]

Thank you so much this video help so much...

[@NaviMarajCPA]

You're welcome Dynasty. Glad you found it helpful.

[@rosasilvestre6556]

Awesome video, clear to the point, simple vocabulary and explains tax vocabulary. No bias view either (which is awesome)repeatedly tells you to consider your business and your needs, and to make your appropriate decision for your business. Other videos just tell you do it this way or no other way, so thanks for being clear in explaining different scenarios.

[@NaviMarajCPA]

Hi Rosa! Thanks for taking the time to comment and leave an honest review of the video. Glad you found it helpful!

[@DreamFirms]

You have a great way of explaining things. Looking forward to more videos you'll make. Keep it up!

[@NaviMarajCPA]

Thank you for the feedback Tyler! I'll do my best to post videos frequently.

[@trending4321]

Thank you! Your video was very simple and easy to understand. Subscribed!

[@NaviMarajCPA]

You’re welcome and thanks for subscribing! Glad you were able to understand everything and learn from this video. See you in the next video!

[@judithsmith1072]

very clear instructional content - thank you

[@NaviMarajCPA]

You're welcome Judith. Glad you found it helpful.

[@dnyvalls]

Great video really helped me confirm what I already knew . Thanks for the conversation...very much appreciated.

[@NaviMarajCPA]

You're welcome...it was a pleasure speaking with you. Hope you got your issue resolved.

[@michaelsalazar7192]

FAU Grad here who went the real estate route. Thank you for this video. Go Owls!

[@mattrose12]

Navi, Thanks for such a great video!

[@NaviMarajCPA]

Thanks for the feedback Matt!

[@virginiadiaz594]

Great video, than you so much for such a plain English detailed video. All my questions and concerns were cleared.

[@NaviMarajCPA]

Thank you for the feedback Virginia. Glad you found it helpful.

[@egod7m995]

Thanks you so much

[@NaviMarajCPA]

You’re welcome Steven!

[@HoloHoloAdventures]

Great information

[@NaviMarajCPA]

Thank you - hope you can apply it or the other strategies to your business.

[@trojan00000]

What a great resource you are. Perfect explanation. Excellent content. I definitely would use your services if you were based out of Michigan.

[@jerryvega5349]

This was a great video!!!!!

[@NaviMarajCPA]

Thanks Jerry! Appreciate the feedback.

[@Dominicano809]

Finally someone who explains it in plain English with illustration. I've been watching many videos and I finally understand now with the way you explained it, fantastic job thank you!

[@NaviMarajCPA]

Johnny F you’re welcome and it was a pleasure speaking with you.

[@albertb5863]

Make a video Navi if you can on “real estate professional,” and the main 2 tests to meet the 750 hrs and material participation and the pros and cons of it.

[@laly7377]

Hello, I am in the process of getting my real estate agent license. Before signing on with a broker, I wanted to know if an LLC should be formed. Additionally, would a SM LLC with a sole prop tax classification be done until I hit that 40k income bracket and move into an S corp? And how do you pay yourself from your commission that goes into your LLC?

[@thelifeinsouthflorida]

Amazing information!! I am a new agent and was very confused but this clarified a lot -- also mid video I realized we went to the same school haha

[@jamesadams6479]

Hey Navi! Great video! Thanks for helping break this down in understandable terms. I really appreciate that! It was good to know that about $40k is the cut off between a regular SM LLC and and an S Corp for tax purposes. You also mentioned that if you have rental property with passive income that you would NOT recommend an S Corp in order to avoid self-employment tax. Can you say more about that? This is my strategy. I'm currently working on a real estate license, but have already acquired an investment property. I'd love to learn more about the WHY behind not having an S Corp set up for this type of business strategy. Thanks so much!

[@NaviMarajCPA]

Hi James. Thanks for the feedback. Here is the link to the video that explains exactly that…enjoy! Link: kzbin.info/www/bejne/oZiVpWWPYt2Xo8U

[@mauriciogarces9673]

I am a new real estate agent in florida and this video just clarify all my questions about what type of entity do I need . Thanks

[@NaviMarajCPA]

@Mauricio Garces thanks for watching and I’m glad you found the video helpful! Be sure to name your entity in accordance with FL DBPR or you’ll be forced to amend your documents.

[@shanicej2522]

This came up right as I’m signing with a broker. They’re going to have to wait today. This is pure gold!

[@SeattleLSB]

One thing to be aware of if you file S-Corp and even though you get to avoid the 15% self-employment tax. You will not receive credit towards your Social Security. This is something you should understand if you choose to go this route.

[@kevinmarretta131]

Mr. Maraj, you incorrectly stated the 1120 due date as March 15th. The deadline was changed to April 15th a couple of years ago. Otherwise, very good explanation...similar to the one I use in my practive.

[@NaviMarajCPA]

Thank you Kevin! I noticed this myself the other day as well - I'll see what I can do to change the closed captioning and perhaps edit the video with a text overlay. Appreciate you bringing it to my attention.

[@sholafabolasi]

This is what I NEEDED! This month alone I am projected to make 57,000 if my deals close. I am NOT trying to pay so much in taxes. I filed for my llc last night, and plan on submitting my s corp as soon as I’m approved!

[@NaviMarajCPA]

That's awesome! Congratulations on your success.

[@sholafabolasi]

@@daphne1743 its different for every state but here in arkansas it cost me 45 dollars to file. Its your Secretary of State that handles business formation. Mine allows you to come in and file or you can file online! That’s where you’ll need to start!

[@royalgreenlantern]

I was just about to create a LLC to send my commissions to. I was trying to see if that was even legal. Thanks for this info

[@InvestwithKhan]

Would you recommend an LLC for a doctor or PLLC? Thanks br. Great content!

[@The.blondest_brunette.]

WOW!! What a GREAT video that explains everything in a reasonable or easy way to understand for the rest of us that don't know much or how it works.... THANK YOU!! You have a new follower for life and also would like to know what part of Florida are you in? How can I get your info? I'm excited to get in touch with you. Thank you again ! Respectfully, Alfonso

[@NaviMarajCPA]

Hey Alfonso! Thank you very much for the feedback - much appreciated. I run a virtual office so I help clients around the country but I am based out of West Palm Beach, FL. If you would like you can visit my website at www.navimarajcpa.com to learn more and schedule some time on my calendar. Alternatively, my e-mail address is [e-mail]. Talk soon!

[@The.blondest_brunette.]

@@NaviMarajCPA will do for sure and thank you very much for the info. Happy Holidays and looking forward to talk to you soon. =)

[@julioj9927]

Hey Navi, I was really interested on what you had touched base on towards the end of this video when you mentioned the MM-PLLC and hoped you continued a bit on that. My question is as the sole owner while investing in properties as well and having to file self employment, what would you recommend? Continuing to file as Sole-Prop and having a SM-PLLC?

[@NaviMarajCPA]

Hi Julio...I'm not sure I have enough information to provide any guidance. In general, if you're running an operational business (e.g. you are a real estate agent) and you also flip homes you can run all of it through an LLC taxed as an S Corp. If you also buy and hold invest real estate (e.g. you are a landlord and have tenants) you would keep that separate from your LLC taxed as an S Corp and have the rental property in its own LLC. Reach out to me or your tax advisor if you need more clarification....or subscribe (if you haven't already) as I'm sure I'll answer your question soon enough.

[@maritzajeri5938]

Very informative video.. thank you for this but just an FYI c-corps tax deadline is 4/15 not 3/15.

[@NaviMarajCPA]

Thank you - I think I corrected that in a pinned comment but I'll double check.

[@HMi_RTravelBlog]

Hello Navi, great video by the way! I’m in the process of getting my FL brokers license. I am in the midst of studying for my exam and of course learning more about LLCs, sole proprietorships and so forth. I have not made up my mind about obtaining a PLLC but, if I do and my current licensing status is upgraded to active broker or associate. Will the PLLC entity designation be dropped? I’m sorry if this is a dumb question.

[@DIY4CFH]

My bank made it impossible to open a business bank account. I had even setup a separate tax id and official sole proprietorship with the state. They were basically trying to force me to open an llc to be able to open a bank account.

[@NaviMarajCPA]

Sounds like you need a new bank. I was a banker for 10 years… unfortunately a lot of the branch personnel don’t know what they are talking about when it comes to establishing business accounts.

[@marleneaquino2730]

Hi, thanks for sharing. is this information still relevant today for a real estate agent?

[@yourrealtorkenesha]

This was great and wished I had seen this 1st. I formed my PA last year (December; Florida) thinking I needed to do this to file all my expenses tor tax. I just applied for my EIN as a LLC. I haven't made any money as a realtor as yet. What election you think I should make (S/C or nothing as yet) and which form(s) to file? I feel like I screwed up. The EIN says Sole Member. Thank you

[@notadumbassliberal6950]

Would this apply to life insurance agents/brokers as well?

[@paulfitzgerald8605]

Fantastic video - very helpful. At the end, you recommend that if you own a rental property that you should keep it in an LLC and have it taxed as a sole proprietorship. Are there cases where you might have a specific LLC for your rental and then create a PLLC for a separate business as a realtor?

[@NaviMarajCPA]

Hi Paul - thank you for the feedback! To answer your question...yes, in almost every case if someone owns investment property in which they are buying and holding the property and rent it out the property with a tenant...that property would be in a separate LLC than that of an (P)LLC where someone is actively working as a real estate agent. The reason is the IRS classifies those types of activities differently....the rental is passive income and the real estate agent is active income. They are treated differently for tax purposes and so you would not want it to be under one (P)LLC. Note: I don't make recommendations in any of my videos; it is just information for viewers to consult with their tax professional or arrange a meeting with myself. Also, I don't believe I say that a rental property should be taxed as a sole proprietorship (but I did sorta point to the sole prop in the video).

[@paulfitzgerald8605]

@@NaviMarajCPA Thank you Navi - extremely helpful. I apologize for misconstruing your video comments about sole proprietorship!

[@therupleteam4091]

In Texas, only a Broker can be paid commission, so a solo agent could not form an s-corp

[@NaviMarajCPA]

There are some workarounds for this issue. Too much to get into here in the comment section but you should seek a tax professional who can help you. The state is more concerned with making sure the person receiving the commission is a licensed real estate agent and doesn’t actually care how your income is taxed for federal income tax purposes.

[@anavandervis6538]

Hello Navi, thank you, this was really great information, I am a realtor in Miami, I opened at the end of December 2020 a PA, because of a big sale that was closing in January 2021. In 2020 I didn't get any commission under my PA, do I still have to file my tax return for the PA on March 15?

[@NaviMarajCPA]

Hi Ana. Thanks for watching and for the feedback. A couple thoughts, not just for you, but for anyone else reading: 1. In FL (and most states) you could have filed for the Corporation (P.A.) in December but with an effective date of 01/01/2021 to avoid having to file an annual report in 2021. This would have saved you around $150. Note: Don't forget to file your 2021 annual report with the FL Division of Corporations. 2. C Corporations, P.A.'s, P.C.'s will file Form 1120 by default but if you made the S Corp election for your P.A. in 2020 then you would file Form 1120S. 3. C Corps and S Corps have to file a tax return even if there is no income or expenses. I actually just finished shooting a video on this topic that you can watch here: kzbin.info/www/bejne/nGemg4N4bMqCZrc

[@Samuelsonfranz]

Hi Navi, Should I apply for an LLC or PLLC prior to signing a contract with my brokerage on how to be compensated? Which one is better? Thank you so much!

[@NaviMarajCPA]

Ask your broker if it matters to them….most of my clients do it after signing with them. The LLC and PLLC are the same as it relates to tax. Most states don’t consider Realtors/agents as “professionals” but some do so you may not have a choice, depends on what your state’s statutes say.

[@JoelPadronn]

Great video! As an LLC > sole proprietor will that allow me to deduct business-related expenses as well such as advertising costs?

[@NaviMarajCPA]

Thank you Joel. Yes, an LLC taxed as a sole proprietor can deduct all ordinary and necessary business expenses, including advertising costs. This also holds true of a sole proprietorship without an LLC.

[@Shannygirl8877]

Oh wow so good thing I always file my taxes early. I just started the S corporation recently. But I didn’t know I was supposed to hire a payroll company. Can you recommend one?

[@ismaelrodriguezrealtor8346]

I just read that in New Jersey you can't get paid as an LLC or any business entity for that matter. Only a natural human is eligible to receive a real estate license and real estate commission payment.

[@NaviMarajCPA]

Each state's real estate commission has its own rules....there may be a workaround but I would rather not discuss it here.

[@WanderingFreeTV]

how should you file as a real estate agent that owns rentals with passive income?

[@KAYDENSKORNERbabymodel]

Hi Navi, where in Fla is your office?

[@AlexBelanRealtor]

Hey Navi, great content! Thanks for explaining all this. I had a quick question for you: I am both a realtor and loan officer. Can I use the same PLLC/LLC for both incomes? Or would I have to have a separate LLC for each? Both have state licenses. Thanks!

[@NaviMarajCPA]

Hi Alex! Thanks for the feedback. We would have to do a bit more research to answer this question....it’s going to come down to what the department of business and professional regulation allows. Either way, there are multi entity structures you can put into place so that all the income flows into one S-Corp. Too much to consider to be able to answer on this medium.

[@marcolozano6019]

Could you please explain K 1 for S. corporation

[@NaviMarajCPA]

Do you have a particular question you need answered?

[@roberthopps11]

Thanks for the great video, I need some clarity, I am recently licensed and my wife has been license but part timing real estate until now. We are forming a team and will be filing for a license. Can we in fact file for a PLLC and then have my wife a partner in entireties. I live in south Florida

[@ChickiesNest]

What a great illustration on tax types and entity types!! I'm a Realtor in NC (broker only state) and want to form an LLC. If my husband becomes licensed, how would you recommend setting this up? An LLC for MM? I know you said you wouldn't necessarily recommend MM for real estate agents but in this case, in your professional opinion, is this the type you would recommend?

[@NaviMarajCPA]

Hey Debi...thanks for watching! I can't really give specific advice on here but based on what you've written above a multi member LLC could be okay if you're both involved (producing commissions) in the business and wish to have it taxed as an S Corporation. Watch my videos about S Corporations if you haven't already to get a better understanding as to why.

[@escf]

So I am about to become a real estate broker and run my own business on my own and eventually hire a team. Should I start off as a PLLC?

[@johnp4153]

Great video. My wife and I started a partnership LLC and disregarded for tax purposes. We own rentals and I plan on getting my real estate license. We did not do the S-Corp, can’t we still file a Schedule C as a simple partnership? Would you recommend putting personal stuff (rentals) in one company elected as Schedule C and to create a new LLC for engaging in real estate activities?

[@NaviMarajCPA]

Hi John, thank you for the feedback. You've got a lot of layers in your question so I can't respond appropriately here. You're welcome to contact me using any of the methods in the description of the video and I'll answer your questions.

[@KillroyX99]

It seems like the tax benefits of an S Corp. go away when you’re high earner because I when your salary increases to ~140,000, the social security tax is capped. Can you confirm?

[@marleneaquino2730]

What is double taxation?

[@JD-bp6qz]

Would you recommend a multi member LLC for someone who does wholesaling with their spouse, but also has their license and sells homes?

[@benjaminbranson9816]

What if you are married and both husband and wife have their Real Estate License and want to work together? Can you form a SM LLC with a married couple and have both licenses underneath? Would you recommend 1 MM LLC or 2 SM LLC's instead? Or Is it possible to have 1 SM LLC with 2 licenses.

[@royalgreenlantern]

Navi thanks I’m a new agent in GA. Been with my broker for a month now. I will be creating a new LLC to send my commissions to. My question with a LLC are you free to take money out like a personal bank account ?

[@Samuelsonfranz]

Hey Navi! Can “DACA” file as an S-Corp?

[@InfinityShotsRealty]

Awesome video! If you are an LLC can you then file later for PLLC if you decide to get a state license later.

[@NaviMarajCPA]

Depends on the state that you're in @InfinityShots. Some states allow for the conversion of an existing LLC to a PLLC if you go that route.

[@InfinityShotsRealty]

@@NaviMarajCPA Thx! I'm in TX. Any idea?

[@CD-gc4pj]

Hey Navi, I’m a real estate agent in Alabama. When creating an LLC do I also need to have an EIN. Also should the LLC be my name?

[@Alexandriocar]

Couldn't a single owner LLC that is taxed as an S-Corp pay themselves using Form 1099-NEC instead of the Salary (Salary like you said would incur a Self Employment tax) if they are passive owners of the rental property?

[@jtantoco70]

Awesome video! I'm a realtor and I have rental property. Should I create a separate LLC for being a realtor and for my rental property? Thank you!🙏🏻

[@NaviMarajCPA]

Thanks Jones! Those activities should definitely be separated. This video will help you understand why: kzbin.info/www/bejne/oZiVpWWPYt2Xo8U

[@JLS702]

Hi Navi ,Im In Licensed Realtor in Nevada Should I file LLC Or SM PLLC . Thank You

[@theycallmetheassassin9278]

Im a loan officer and real estate agent and was going to establish an LLC this year for tax purposes but the Scorp requires more time, costs, paperwork..It seemed like I would be paying more to manage the Scorp than the self employment tax? And just doing a single entity LLC doesn't save taxes.

[@NaviMarajCPA]

Watch this other video of mine that will help you make that decision...it discusses “Does the S Corp make financial sense?” Here is the link: kzbin.info/www/bejne/h3e8d3qcfbSoras

[@kimlivingston3201]

So the correct business structure to form is the LLC as real estate agent ? Just wanted to know if I am following through .

[@NaviMarajCPA]

Hi Kim...it all depends on what state you are in and the rules/laws with that state's real estate commission. I would contact your state's department of professional regulation and ask.

[@RyanIZReaper]

In California, you can't have a PLLC or use your license under an LLC. As a newer agent in CA, would you recommend just using liability insurance? Also, how would you go about taxation for real estate agents in CA who can't have the S Corp status under an LLC?

[@NaviMarajCPA]

Hi Ryan - thanks for the questions. Most of your questions are legal related as opposed to tax related so you may want to reach out to an Attorney in CA that is knowledgeable about this specific topic. I would also ask your brokerage if they provide Professional Liability (sometimes referred to as Errors & Omissions) so that you aren't buying an additional insurance policy that you may not need. From a tax perspective, I would form a Professional Corporation in CA but only when I thought I would hit about $45,000 in profit. This is not advice and just general information.

[@RyanIZReaper]

@@NaviMarajCPA Thanks for the information

[@dnldnl4880]

If a couple of agents husband and wife team up would you recommend me pllc? One of them is full time agent the other has a W2?

[@NaviMarajCPA]

DNL DNL, I would have to know more about your specific situation before I answered that question. There are a lot of factors that I consider when providing answers. Sorry I couldn't be of more help.

[@moneixo]

Thank you so much for this video but I got a bit confused towards the end. I just became an agent in CA and I have not made a sale yet but I plan to invest in real estate soon. Should I create my LLC now and can my investments be under the same LLC?

[@NaviMarajCPA]

Hi @moneixo! Thanks for watching. You should not have your rental real estate in the same LLC as the income you earn as a real estate agent. Also, in CA all LLCs are subject to a minimum franchise fee of $800 per year so keep that in mind in your decision making process.

[@moneixo]

@@NaviMarajCPA thank you so much for responding!

[@Djemky.Annelus]

Great Video, what do you feel like is the best entity is best for just starting off as a real estate agent making $80-100k a year or more ? I have CCORP right now

[@NaviMarajCPA]

Hi Annelusrealestate, thank you for the feedback! It's tough to answer that question without speaking to you personally. I feel pretty confident that, in general, the C Corp would not be the best from a tax savings perspective. Again, generally, if you're making $40,000 or more in net profit (income minus expenses), you should be an S Corporation to save money in self-employment taxes. Feel free to schedule a 10 minute intro call with me if you have follow up questions: calendly.com/navimarajcpa/intro.

[@shi_insu9453]

Navi, no time available on your calendly for July nor August. Would love to speak with you.

[@solanocountyhomeswithraven3768]

I just filed for my LLC and didn't see anywhere to choose the PLLC. Is this necessary as a licensed real estate agent in California?

[@NaviMarajCPA]

Hi Raven! I would ask that question to a business attorney in California that is experienced with business formations and specifically licensed professionals. Based on what I’ve read, realtors in California who are establishing an entity to render their real estate services should establish a professional corporation, not an LLC or PLLC. Let me know what you find out.

[@davidkuperschmid5274]

What is a reasonable salary for a real estate agent in a market where homes sell for several million dollars and commissions can be very high? Hard to argue to IRS that reasonable salary is 60 grand. Or am I incorrect?

[@NaviMarajCPA]

Every reasonable compensation scenario is unique so this isn't a straight-forward answer. It depends on the profitability of your business, did you take the profits out of the business (via distributions) and how much of your time did you (as opposed to others or leveraging technology) actually spend earning the profit. Those are a few items I would consider when thinking about what a reasonable compensation might be for a real estate professional.

[@jeanyshajean-baptiste1554]

Thank you for the value Navi. I'm still a little confused. So I've been a realtor for a year but I haven't made a sell. I will have one though before the year ends. Would I register as a LLC or PLLC?

[@NaviMarajCPA]

You’re welcome Jeanysha! Based on the little I know about your specific situation, I wouldn’t form an entity in 2020. I would consider it in 2021 if you’re projecting to increase your production.

[@jeanyshajean-baptiste1554]

@@NaviMarajCPA Thank you.

[@NaviMarajCPA]

I think this video may help you further Jeanysha: m.kzbin.info/www/bejne/h3e8d3qcfbSoras

[@feixing8939]

If I do not make a sale, I can still write off things like mileage etc. as a sole proprietor. Is that correct?

[@GodSaveTheRepublic]

what if you are your spouse are on a real estate sales team together? mmllc?

[@NaviMarajCPA]

That works or, if your broker pays commissions to one person regardless of whose sale it is, a single member llc may work.

[@etiargamanarmstrong]

Does this advice work for photographers too?

[@NaviMarajCPA]

Sure does!

[@therupleteam4091]

Would a Husband/wife team have a multiple member llc

[@NaviMarajCPA]

That is one option but there are others too that may be better depending on various factors on the tax side of things related to social security and Medicare taxes and other tax strategies/planning.

[@rcmrealtor]

Hi Navi, first off, thanks for this video. Incredibly helpful. I just passed my Real Estate License exam in California, should I register as an PLLC prior to joining a brokerage?

[@NaviMarajCPA]

Hi Regina. I'm not a business attorney but my understanding in CA is that real estate professionals in CA should not form an LLC or PLLC. I believe the state wants you to form a PC which stands for professional corporation. That said, I know of many agents who form an LLC anyway.

[@Allen-kg1bv]

Great video! Do you know a CPA who focuses on real estate in SoCal area?

[@NaviMarajCPA]

Hi Allen - thank you for the feedback!. I can help you if you are interested...I have clients in California. Unfortunately I don't know any CPAs in SoCal that focus in real estate. You can find out more about me and my services on my website which is navimarajcpa.com.

[@kaijaibakery505]

Hey Allen, check out Robert Hall & Associates, in Glendale. I have used them for over 5 years now, and they are the Realtors CPA's in SoCal.. ask for Mike Watson.

[@LG-nh4bs]

If you file under the LLC, but you haven't transition to the S corp, can you still take advantage of section 179?

[@NaviMarajCPA]

Sure can!

[@cecebartender6304]

Hello So to be clear. When I become a realtor I would need to form an LLC and work under my broker (the law in my state) for better tax break rather than just be an independent contractor? Thx.

[@NaviMarajCPA]

Hi @CECE Bartender. You'll always be considered an independent contractor in the eyes of your brokerage, but by forming an LLC, you're giving yourself the ability to be taxed as an S Corporation in the future. The LLC by itself does not save you any money in taxes...having the LLC taxed as an S Corp can save you money in taxes, specifically self-employment taxes. There are other videos on my channel that discuss the S Corporation. Thanks for watching!

[@cecebartender6304]

@@NaviMarajCPA thx for the reply

[@alejandravalencia1060]

Hi Navi, I am a California Licensed Realtor, I work full time as an assistant to my broker and have sold one house on the side. Should I make an LLC and then S Corp? What do you recommend? I do not want to owe a lot in taxes and eventually I will invest in other properties once I am able to do so, Please advise! Thank you.

[@NaviMarajCPA]

Probably not Alejandraa. I usually don’t recommend an S Corp until you’re making $40,000 in profit in your business. I am assuming you are an employee receiving a w-2 for the work you do as an assistant to your broker.

[@04motu]

hi do you anyone who helps to set up a real estate brokerage

[@richgebbia3594]

Wait so I'm filling out my tax for info for the IRS now. Would I make my legal classification an S corp or an LLC?

[@NaviMarajCPA]

Sorry Rich, I don’t understand your question. S corporations are not legal entities though, it is a tax classification. LLCs are legal entities.

[@richgebbia3594]

@@NaviMarajCPA I realized it didn’t make sense haha. Sorry about that

[@phonhoonsan9627]

Hi Navi, New real estate agent here (3 months), I have a full time job, and real estate is my part time job. I haven't sold anything yet...but I'm hoping 2022 will be fruitful. Do I need an LLC or PLLC? THNX!

[@NaviMarajCPA]

Hi Phon....that answer to that question depends on your state's requirements. For example, in CA, based on my understanding, you can't have a PLLC (or LLC for that matter) as a real estate agent. In other states, the state makes it clear that a real estate agent should form a PLLC over an LLC.

[@ArtisticallyAspiring]

So once you elect your llc for a s-Corp is there a way to change it?

[@NaviMarajCPA]

Yes, you can revoke the S Corp Election but make sure you understand the pros and cons when doing so. Here is a link to IRS website about this: www.irs.gov/forms-pubs/revoking-a-subchapter-s-election

[@ArtisticallyAspiring]

@@NaviMarajCPA thanks for responding, I just emailed your business email regarding this matter.

[@PreetiDeshwal-vv8ox]

hi i need someone who would help to set up a real state brokerage do you know anyone who could help as i want to make sure i am covered with everything

[@DIY4CFH]

What happens when you are employed by a company and receive a salary but also receive a 1099 for additional commissions.

[@NaviMarajCPA]

That means you’re an employee and an independent contractor (business owner). Do you have a more specific question I can help answer?

[@ranjitsandhu4918]

Excellent videos but not much reviews. I'm trying to make my own Real; Estate brokerage and need help and I'm in the state of CA.

[@NaviMarajCPA]

Hi Ranjit...you can schedule some time with me if you wish to discuss your situation in more detail. My understanding is that in California, if you wish to establish a brokerage, you must must form a Professional Corporation (P.C.). It is similar to the P.A. I reference in this video.

[@ranjitsandhu4918]

@@NaviMarajCPA When do you have time?

[@NaviMarajCPA]

Visit my website and you can view my calendar there. Thanks!

[@kenitajames3203]

Hello this video came just in time. I pass my state an national to get my Real estate License. So to make sure I get this right I never sold a home yet there is no point of me right now in July or August to form a LLC. I mind as well stay a sole proprietor up until I at least made $40000 an over if that's what your basically saying?????

[@kenitajames3203]

An by the way I am in the state of VA so I don't know if the rules changed or not

[@NaviMarajCPA]

You probably have the right understanding but to clarify, in my opinion, you should form your llc as early as possible in the year you project to have at least $40,000 in profit.

[@kenitajames3203]

@@NaviMarajCPA thanks for the quick response

[@kenitajames3203]

@@NaviMarajCPA I have one last question since I stayed in the state in Virginia can I use a LLC that's different from my 1st and last name as an real estate agent. I'm trying to look it up online now and I can't find the rules or regulation for my state with out me writing them

[@NaviMarajCPA]

I don’t know Kenita. Contact your state’s licensing department and ask. Alternatively, the person at your brokerage that handles the accounting/commission payments (the person that will issue your 1099-NEC at the end of the year) should know as well.

[@blackezi3]

I plan to be a Real Estate Agent and Real Estate Investor. So would that mean I can register as a MM PLLC ? Should I start as a Sole Proprietorship, then when I get 40k in income, transition to a MM PLLC?

[@NaviMarajCPA]

Thanks for your question. I would need to know more about your specific information about you and what you consider real estate "investment" to provide a proper response. There is a lot that goes into the equation....you'll need to understand what your state's real estate commission allows as well as what your state's laws allow for forming a business entity as a real estate agent. Sometimes it is very simple, other times it can be complicated. In general, if a (SM) PLLC is available in your state, that is your starting point for your work as a real estate agent. In regards to your real estate investments, I can't think of any reason to form a PLLC....perhaps a LLC. Whether or not that LLC is single member or multi member depends on if you're bringing in other people to invest with you. Please note that this is not advice specific to you or anyone else reading this response.

[@blackezi3]

@@NaviMarajCPA Oh ok. I plan to be a buy and hold investor. In commercial rentals and some residential rentals. I was wondering if I can form a holding company for my investments, and form a Corporation or C-Corp for my Real Estate agent business?

[@NaviMarajCPA]

Buy and hold investors typically establish LLCs - sometimes they put multiple properties within one LLC, other times they have an LLC for each property. Again, not specific advise to you, but, most of my clients establish an LLC for their real estate sales business, and, when it makes financial sense to do so, make the S Corporation election to have their LLC taxed as an S Corporation. Watch my other video about S Corporations, it may help you.

[@blackezi3]

@@NaviMarajCPA Thank you for the information, I will check out your video. I wanted to know, is there a difference between a LLC taxed as a C-Corp and a Corporation?

[@NaviMarajCPA]

You may want to re-watch the video to confirm your understanding. An LLC will always be an LLC for legal purposes but for tax purposes may be taxed as a sole proprietorship, partnership, S Corporation or C Corporation. A Corporation will always be a Corporation for legal purposes but for tax purposes can be taxed as an S Corporation or a C Corporation.

[@sherripetway2640]

I'm a new realtor in NYS. I've applied for a LLC already, however, do you know if I can amend it to a PLLC? I also would like to list my son as an employee of my llc. What entity would you suggest I register under? Btw your information was great!

[@NaviMarajCPA]

@sherri petway, thanks for the feedback! Contact your state’s division of corporations and ask them if you can convert. In regards to adding your son as an employee - I would consult with your tax professional to determine if that’s a good idea or not. Depending on his age, you may not need treat him like you would other employees.

[@sherripetway2640]

@@NaviMarajCPA Thank you for replying! I contacted the NYS Division of Corps and I would 1st. have to amend the original one and 2nd. Reapply (this time for a PLLC). I spoke with an attorney and accountant who both concluded that there is no legal reason why I need a PLLC. However, if I wanted to I could go through the changes to obtain a PLLC. Furthermore, my son is 11 and he can be added without the stipulations of a normal employee. Lastly, if & when Biden becomes president (per the accountant) it will not make any difference under his new tax bill to be a S-Corp or Sole Proprietor.

[@bryantcaminero9693]

Are you based out of Florida? Miami ?

[@NaviMarajCPA]

Hi Bryant! I run a virtual office so I can help clients around the country but, yes, I am out of Florida...specifically Palm Beach County.

[@bryantcaminero9693]

@@NaviMarajCPA great good to know. I am too. Dania beach to be precise. Can we connect offline. Couple things I wish to run by you. I am a realtor, also looking for a new accountant. My email is [e-mail]

[@NaviMarajCPA]

Sure, I'll shoot you an e-mail with a link to my calendar. Talk soon!

[@bryantcaminero9693]

@@NaviMarajCPA Sounds great I really appreciate that and look forward to your email.

[@TonyStark-sj3kl]

Tai Lopez?

[@NaviMarajCPA]

Ironman?

[@bwroolie]

Can a new real estate licensee [sales associate] operate through an LLC legally?…. Here is the scenario: A California real estate licensee [BPC §10014] licensed simply as a real estate salesperson [id §10016] who is not a real estate broker [id §10015], a broker associate [id §10015.3], nor a responsible broker [id §10015.1], is hired as an independent contractor by a real estate broker and, upon the sale of a property, is entitled to a commission payable by the licensed broker to the real estate licensee as per their previously negotiated terms. No problem, however, the real estate licensee has formed an LLC to operate its real estate agency activities. Reasons for doing so are believed to be to obtain liability protection for its members and managers [the real estate licensee] and to minimize excessive self-employment taxation of his/her commissions. The question is then, can the licensed real estate broker pay the LLC directly any commissions that were earned by the real estate licensee? Answer, No… Here’s why: If the licensed real estate broker pays the LLC directly, then, the broker is in violation of BPC §10137 [paying commission to a non-licensed entity; LLC is not the licensee]. If the licensed real estate broker pays the real estate licensee directly, then, the real estate licensee is subject to self-employment tax for the entire commission as he/she accepted payment as an individual and is therefore deemed a Sole Proprietorship. Any money thereafter transferred into the LLC is merely a contribution made by the LLC member and is not deemed income earned by the LLC. Further expenses claimed by the LLC can only offset basis as there is no in come except for any income earned that is not commissions paid to the licensee. The bottom line is the LLC is not authorized to receive commissions as it is not an authorized licensee of the Department of Real Estate and any commission paid to the licensee directly is commission paid to a Sole Proprietor and thus subject to self-employment tax. It is clear that some liability protection is already provided to the real estate licensee by the real estate broker through the hybrid mix of employer-employee and independent contractor relationships. [Business and Professions Code §10032 and §10132, and Civil Code §2079.13(b)] There seems to be, however, no escaping the self-employment tax for a real estate licensee, unless, the licensee is a shareholder of a corporation [with an S-corp status] that is licensed by the Department of Real Estate. This would be a license separate from the real estate licensee license or real estate broker license. It’s important to note that a corporation is not eligible for a corporate broker license issued by the Department of Real Estate if it does not have a responsible broker as one of its officers; a credential a new real estate licensee does not have nor is eligible for except after two year experience among other requirements. To stay in compliance with the Department of Real Estate and the Internal Revenue Service, a real estate licensee should think carefully about how they manage and report their commissions during their first two years of service. Whereas one who has a real estate brokers license can incorporate and secure a corporate broker license thus affording them legal protection and tax advantage while remaining in full compliance of the aforementioned governing authorities.