Accounting for Real Estate Brokers & Agents

Since you’re not an employee of your real estate brokerage firm or agency, you’re considered self-employed. This means you owe the “self-employment tax,” which includes Social Security and Medicare taxes. In addition, if your state collects income tax, regular estimated tax payments to your state are also necessary.

Legal Structure: How Real Estate agents pay taxes depends on the structure of their business.  At P&N, we can evaluate your situation and recommend the right entity for your business.

Sole Proprietorship – A sole proprietorship is the simplest form of business, where the owner and the business are one.

Limited Liability Company (LLC) – An LLC combines the liability protection of a corporation with the flexibility of a partnership.

Partnership – A partnership involves two or more individuals or entities sharing ownership and responsibilities.

S-Corporation – An S-Corporation is a pass-through entity that combines features of

corporations and partnerships.

Record Keeping

Keeping track of financial transactions, commissions, expenses, and tax-related documents is essential. Proper records facilitate accurate accounting, tax reporting, and financial planning

Tax Deductions

As a self-employed real estate agent, you’re eligible for various tax deductions. Some common ones include:

• Business Expenses: Deductible expenses related to your real estate business, such as marketing costs, office supplies, and professional fees.
• Home Office Deduction: If you have a dedicated home office space, you can deduct a portion of your home-related expenses (like rent, utilities, and insurance).
• Vehicle Expenses: Deduct mileage or actual vehicle expenses related to business use.

• Meals and Entertainment: You can deduct a percentage of meals and entertainment expenses incurred while conducting business.
• Education and Training: Costs for real estate courses, seminars, and professional development may be deductible.
• Health Insurance Premiums: If you’re self-employed, you can deduct health insurance premiums.
  

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