To set up a PREC, you’ll need to engage a lawyer to create a transfer agreement to transfer your assets from your sole proprietorship into the corporation, as well as to draft and file articles of incorporation and related resolutions.
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How much does it cost to set up a Prec?
PRECs will have additional costs. Incorporation costs with a corporate lawyer may range from $1,000 to $3,000. Annual bookkeeping and accounting costs could cost an incremental $1,000 to $3,000 over and above a realtor’s current bookkeeping and accounting costs.
How does a Prec work?
In terms of the flow of funds for your commissions, what will happen is that when you earn a commission that amount will be paid directly to the PREC rather than you as the agent, and then as the agent, you have discretion to pull out funds from the PREC to cover your living expenses, and to the extent that you
Who can own a Prec?
Each PREC must be controlled by one individual realtor and, as previously discussed, the definition of controlling shareholder within the regulation means the controlling shareholder owns all the equity shares of the PREC. This means that a group of realtors cannot come together to own equity shares of one PREC.
Can a Prec own real estate?
PREC can only have real estate professionals (registered broker or salesperson) as shareholders of equity shares (voting shares), while family members (parent, spouse, children) are allowed to own non-equity shares (non-voting).
How do I set up a PREC in Ontario?
Send an email to [email protected] providing the name of the registrant (controlling shareholder), the legal name of the PREC and the PREC’s address for service. For more information, refer to RECO’s PREC Checklist.
What are the benefits of a Prec?
The list of “pros” for a PREC include health spending, capital gains exemption, tax deferral, and income splitting.
- Corporate taxes. PRECs can take advantage of corporate tax rates.
- Health Spending Account. PRECs can set up a Health Spending Account, or HSA.
- Tax Deferral.
- Capital gains exemptions.
- Income splitting.
- Insurance.
Can a Prec hire employees?
Furthermore, just like any other legal enterprise, a PREC can hire employees regardless of their profession (so long as their remuneration does not entitle them to shares if it would throw the PREC offside) or enter into independent contractor arrangements.
Can a Prec loan money?
Shareholder Loan Rules
These rules apply to incorporated businesses, including personal real estate corporations (PREC). Under these rules, money borrowed from the business is included as income on the shareholder’s personal tax return.
How do you name your Prec?
For a PREC, it’s best to go with ‘Your first name/first initial, your last name, Professional Real Estate Corporation. ‘ A lawyer can help advise you on appropriate names that are likely to be approved.
Why should I incorporate my realtor?
By incorporating your real estate business, you will be able to protect your personal assets such as your home, car, personal bank accounts, and other properties against company debts. Incorporating also reduces the risk of an IRS audit, which is why many real estate investors take the plunge.
Can a real estate agent incorporate in California?
On a bipartisan 56-0 vote, AB 687 (Daly; D-Anaheim) passed the California State Assembly. This bill will allow real estate brokers to incorporate as a limited liability company (LLC), in addition to a C or S corporation.
Is Prec A PSB?
Personal Services Business – A licensed realtor who is the voting shareholder of the PREC and who would be an employee of another entity but for the existence of the PREC would be considered to be operating a “personal services business” (“PSB”) with adverse income tax consequences.
What is a PREC in BC?
As a licensed Realtor in British Columbia you have the option of operating your business through a professional corporation known as a Personal Real Estate Corporation (the “PREC”). This is one of the legal services that our real estate lawyers frequently receive inquiries for.
How is Prec set up in BC?
How to Register for a Personal Real Estate Corporation in BC
- Choose an appropriate name for your PREC and ask your lawyer to reserve this business name in the Corporate Registry.
- Work with your lawyer to incorporate your business under the chosen name.
How can a Realtor write off a car?
To take the deduction, multiply the mileage you put on your car for work by the IRS mileage rate.
- Example: If you drove 15,000 miles last year for work, your mileage deduction would be $8,700 (0.58 x 15,000).
- Example: You use a corner of your bedroom as your workspace for your real estate business.
Can real estate agents be S corporation?
Many real estate professionals choose to designate their LLCs as an S corporation, known as an S corp, for tax purposes. While this move can lead to significant tax benefits, it also comes with an added level of responsibility.
Can a real estate agent form an LLC in Florida?
Florida Real Estate Professional Become a PA, LLC or stay a sole proprietor?Florida license law allows sales associates and broker associates to incorporate as individual licensees for the tax benefits and personal risk reduction. This can afford tremendous tax savings and protect personal assets.