Real estate agents are independent contractors.
But why should you incorporate?
The most important reason, is to save you money. A lot of money!
Let’s say that your corporation employed you and paid you a salary at a typical agent income of $40,000 for the same year. Now, because you are an employee, the corporation has to pay half of your FICA and medicare tax while you pay the other half. Even counting both halfs, you save $9,180 just in FICA and medicare taxes alone.
Your corporation can also pay your legitimate business expenses, like mileage or vehicle costs, advertising, client meals, and so forth, out of pre-tax dollars.
Whatever money you don’t take as legitimate business expenses, you can take as corporate dividends and only pay income tax and not FICA and medicare.
And if your total taxable income (after all your allowable deductions) is under $68,000 then your tax rate is no greater than 15%! That’s a savings in your income tax rate of another 10%!
Your corporation could own your car, and make any payments if there are any. My company owns the car I drive, and my corporation owns a boat too. After all, I must entertain clients sometimes, and I also need to show waterfront property using the company boat.
But there is another benefit: limited liability.
The corporation is a separate legal entity and if it owns no assets and it distributes its cash regularly, its potential loss in a lawsuit is minimal.
You can save a small fortune on liability insurance and E&O coverage.
So you spend a few hundred to save $20,000 a year in taxes? That’s a pretty good investment.
For Assistance Go To: www.theexodussolution.com/incorporate-yourself