Have You Thought about Personal Real Estate Corporations?
Ontario real estate agents should consider incorporating a personal real estate corporation. They will have additional responsibilities and be required to pay additional licensing fees. However, Ontario real estate agents can expect to gain a number of important benefits. Examples include the ability to limit their CPP contributions, the ability to split their income, and increased ease in building up their credibility to potential clients. On top of that, personal real estate corporations offer limited liability so long as it isn’t a malpractice issue. As such, Ontario real estate agents should look into the expectations of personal real estate corporations to see if incorporation is worthwhile for them.
What Are the Accounting Expectations for Personal Real Estate Corporations?
Here are some of the bookkeeping and accounting requirements for Ontario real estate agents under personal real estate corporations:
- Ontario real estate agents who choose to incorporate will need to set aside the HST that they collect. After all, the HST doesn’t belong to them. Instead, it belongs to the government, meaning that they act as tax collectors in this instance. Please note that Ontario real estate agents are entitled to deduct the HST charged on their expenses from the HST that they are expected to pay.
- Said individuals should also set aside a portion of their commission income because their income taxes aren’t automatically deducted from their commission income. Suffice to say that they don’t want to be caught by surprise when their income taxes are due.
- It is a good practice for Ontario real estate agents to keep the receipts for every single business expense that they intend to claim. Generally speaking, it will be enough to maintain scanned copies of the receipts. However, interested individuals should keep up-to-date backups of their important information in case their computer systems get compromised.
- Some expenses might need more complicated arrangements. For instance, if someone wants to claim travel expenses, they are going to need a way to monitor their mileage.
- It is possible for people to perform their accounting by hand. However, accounting software can save them a lot of time while minimizing the chances for errors to come up. Of course, there are also accounting professionals out there if they want even more assistance with their bookkeeping and other accounting-related problems.
Incorporating a personal real estate corporation is a huge step. As a result, Ontario real estate agents should make sure to contact us if they have remaining concerns. The financial consequences can be huge, meaning that they need to be well-informed before proceeding further.