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South Carolina License Law allows for licensed real estate agents to establish a business entity, for tax purposes, when practicing real estate. Business entities such as a Limited Liability Company (LLC), or S-Corporation have become very common and can be a good idea if used correctly. When establishing the business entity, it can be set up as one owner or multiple owners. If there are more than one owner, all owners must have a Active Real Estate License and all licensees must be licensed under the same Broker-in-charge.
License law allows the business entity for tax purposes. Most licensees are Independent Contractors and receive a 1099, which includes all commissions earned, at the end of each year. Independent contractors do not have any tax deductions taken out prior to receiving the check. Therefore, licensees must estimate their annual income and pay taxes each quarter based on the annual projection. Operating out of a business entity can serve as a benefit to the licensee when used for tax purposes.
Unfortunately, many licenses have formed a business entity for the wrong reasons, which are not legal and could create significant liability. Licensees are not permitted to market themselves under the business entity. By doing so, the public may consider the business entity as the company they have hired for representation which is in no way the case. Licensees should never use the name of their business entity in marketing such as, business cards, flyers, signs, etc. Rather, the name of the Real Estate Company must be used in all marketing and advertising.
Once the business entity is created, the licensee will ask their Real Estate Company to pay commissions to their business entity and not to the licensee personally. This allows the licensees to report the income under a Tax ID Number rather than their personal Social Security Number. There has been much confusion over starting a Business Entity and how it should be used. To help answer questions about this subject matter, Andy Aun, with Aun and McKay Law Firm, will be holding a seminar on Thursday, May 30th. This is a free seminar and open to anyone. Mr. Aun asks that everyone attending RSVP so he will know how much food to have prepared. Please find additional information about the seminar attached below.
If you are interested in getting your South Carolina Real Estate License, we would love to have you attend our Real Estate School For Success. We will train you to not only pass the state exam, but also teach you how to build a lucrative career in the Real Estate Industry. We also offer many other licensing courses such as Property Manager, Appraiser, Home Inspector, etc. The Real Estate School For Success is an approved MyCAA provider, which allows for many military spouses to take all classes at no charge. Give us a call for details. You can also receive a 10% discount on any licensing class by entering the promo code below when you register on line at the Real Estate School for Success. This discount may not be used with Designation classes or promotional classes that have already been discounted.Share this on: