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Safeguarding Your Real Estate Career: The Advantages of a PLLC for Florida Realtors

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As a Florida Realtor, you are not just helping clients buy and sell properties. You are managing legal and financial risks for clients every day. One important aspect to consider is the structure under which you operate your business. Many Realtors operate as sole proprietors, but a smarter, more protective option is forming a Professional Limited Liability Company (PLLC). In this blog, we will explore why holding your license in a PLLC can offer significant benefits and protections.

Liability Protection:

One of the primary reasons for forming a PLLC is to protect personal assets from business liabilities. As a Realtor, you face potential risks such as lawsuits from clients or contractual disputes. Holding your license within a PLLC can shield your personal assets, such as your home, vehicle, and savings, from being used to satisfy business debts or legal judgments. By maintaining a clear separation between your personal and business assets, you can minimize the risk to your personal finances.

Tax Advantages:

PLLCs offer flexibility with tax planning and can provide federal income tax advantages for Realtors compared to other business structures. While you should consult with a tax professional to fully understand your specific tax situation, a PLLC can allow for the deduction of business-related expenses and can typically help avoid a portion of any applicable self-employment tax to potentially maximize your income and minimize your overall federal income tax burden.

Professional Image:

Operating as a PLLC can enhance your professional image and credibility in the eyes of clients and colleagues. It demonstrates a commitment to professionalism and accountability, which can be attractive qualities in the competitive real estate industry. Clients may feel more confident working with a Realtor who has taken proactive steps to protect their business and clients’ interests.

Properly Creating and Operating Under a PLLC:

There are certain requirements that must be followed in order to properly create and operate your Realtor license under a PLLC. For instance, the Florida Department of Business and Professional Regulation (DBPR) limits the name of the PLLC you can register. Then, after filing your PLLC with the state, you must submit a form to the DBPR to change your license from your individual name to your PLLC. You will also need to obtain an Employer Identification Number (EIN) from the Internal Revenue Service so that you can open a separate bank account for the PLLC. Next, you will need to inform your Broker of the license change so that the Broker pays your commissions to your PLLC instead of your name individually. Finally, to avoid a portion of self-employment tax, you must file a specific tax election form with the IRS.

As you can see, holding your real estate license in a PLLC offers significant benefits in terms of liability protection, tax advantages, and professional image. While the decision to form a PLLC should be carefully considered based on your individual circumstances and goals, it’s an option worth exploring for Florida Realtors looking to safeguard their business and personal assets. However, it is important that the PLLC is created and structured properly in order to take advantage of these benefits. As always, consult with your trusted real estate attorney before establishing your PLLC.

T.R. Smith, Esq.

T.R. Smith, Esq.

T.R. Smith is an experienced attorney who has been practicing law since his admission to the Florida Bar in 2013. He focuses primarily on real estate transactions but has experience in civil litigation, probate, estate planning, and business law.

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