Real Estate Team Entity Formation

9 Replies

What is the best entity type/ structure for a real estate team. I am not sure the different benefits of an LLC C corp and S corp. I have heard most people do LLC, but most people are not growing a med sized business. Team will be growing and larger 25-100 people.

INcludes:

Buyer agents

ISA's

Assistants

Videographer/Marketer

Listing Agents

Team leads

CEO

Eventually Accounting

Thank you all very much for you insight.

@Christopher Dunson I think the real question is, will your team have employees or not? Also, will your team be the same as the brokerage or will you have your team at a brokerage owned by someone else? The reason I mention this is that most teams don't really employ anyone as everyone works for the brokerage technically. For this reason, I think the goal here is probably more about tax efficiency and not asset protection. 

I am following this conversation as I have a small team here in Chicago!

@Christopher Dunson That is a state specific question where you might add some local keywords so you get some local people to reply that know the Nevada law.  Congrats on the team plan!

I would first say that this is a question for your CPA. But I can tell you what I have setup in the past for in the example that you provided. When I was a small team lead we were structured as a LLC (pass though enitity) with 2 part time and 1 Full time employees (ISA and marketing staff) and 3 agents working as 1099 contractors. As we grew, (15 employees) I considered restructuring to a C Corp but on the advice of my CPA and tax strategist we folded the LLC into a Sub Chapter S - LLC to avoid double taxation.

@John Warren Thanks a lot John for the insight and the perspective. Here, the staff would be my employees and the agents would be 1099 employees under the brokerage and myself as a team leader if I'm not mistaken and I will confirm this and update what I find.

@Christopher Dunson

https://www.thebalancesmb.com/what-is-the-difference-between-an-llc-and-a-corporation-397526

It looks like you need a basic primer on entities. Try the above page. They have lots of different t stuff. But, there is a lot on LLC's, C Corp, S Corp (which is a tax status and not a legal entity). Troll around their articles to familiarize yourself.

Good luck

@Christopher Dunson you are totally right about the employees versus agents being 1099. For what it is worth, I have a small team and it is run through my S corporation. My accountant and attorney both agreed, so I went with i!