Over the course of the last 12 years that I have been in the Real Estate Business I have had 3 different Accountants. I have never had any of them suggest that I incorporate. Recently while having a conversation with an Accountant, he was surprised to hear that I was not incorporated. I asked him why he thought that it was important and he gave me the following reasons:
1. Deductions...you can deduct mileage and business lunches and more. With the mileage credit alone, you can probably pay off the costs of incorporating.
2. Credibility......showing that you are a business and that you know how to run a business is impressive to clients and shows that you are a professional.
3. Liability.....separating yourself personally from the business is a good idea in a litigious society. Making your business responsible instead of you (and your assets) is always a good idea.
4. Establishing Credit.....For the younger Agents, this can be a good way to establish credit, through small business loans, or start a brand new credit profile through the business.
5. Other tax advantages...........Health Insurance paid for by your company and also retirement benefits or accounts also paid for by your new company.
All of these things sound fantastic, but there are many papers to file and fees to pay. I think that each Realtor should speak to their own accountant to see if this is something that would benefit them. There certainly seem to be enough points to the plus side of Incorporating, including being less likely to be audited!!! I will be investigating this on a personal level myself before my 2011 Taxes are due but if any of you have any thoughts, information or personal experience, please feel free to share your info with us all!
Life is good!
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