If you recently started a real estate business, we want to congratulate you. You’re on your way to building a successful real estate company. But, we also want to gently remind you that you once you start your business, it doesn’t stop there. Your new real estate business comes with a set of legalities that you need to ensure you adhere to so your business doesn’t get into legal trouble and get shut down. We’ve gathered a quick checklist for you to follow to ensure you have the right permits, licenses, insurance and other business components.
Licenses & Permits
Of course, along with running a business, there are certain rules, regulations, and legalities you need to be aware of.
Local Business Licenses and Permits
Your region, county or city may require you to have licenses or permits to operate a business. Talk to your city’s Chamber of Commerce to learn about your local licensing and permit requirements.
Most real estate businesses should have comprehensive business insurance. There are various different types.
Workers Compensation Insurance
This insurance provides coverage for job-related illnesses, disabilities or injuries that affect employees. Regulations for this insurance vary from state to state. It typically covers areas like medical costs, loss of earnings, compensation, and retraining. If you are a solo realtor, you may not need this.
General Liability Insurance
This insurance protects your business from claims due to being sued or other lawsuits. This may include injury to members of the public, property damage, personal liabilities, legal defense and more. It can help protect your business from financial penalties and bankruptcy. Because you will be in and out of homes all the time, you should get a policy that provides excellent cover.
Professional Liability / Indemnity Insurance
If you provide professional services, professional liability insurance can protect you from malpractice allegations and other issues as a result of providing work. Because you are providing advice and professional services, you definitely need this cover.
Home and Auto Insurance
If you are working from home or driving a vehicle for work, check if your existing home and auto policies cover you for work use of your home or car. If not, you should either expand your policy so you’re covered or get dedicated business insurance.
All businesses need to have aRegistered Agent. These are individuals or other businesses who can accept legal documents on behalf of your real estate company.
Although you can act as your own Registered Agent, we recommend using a professional service. It ensures there will always be someone available to receive important legal documentation on your behalf and also removes your name and address from the public record.
There are certain forms and legalities you need to follow to keep your business in good standing.
File an Annual Report — most states require businesses to file a report once a year. This report has details of any major changes to who owns a business and other major impacts on a business’s legal status.We can file your Annual Report on your behalf.
Pay estimated taxes — you will be expected to pay estimated taxes on what you plan to earn in the current business year. You will need to pay estimated taxes in April, June, September, and January (of the following year).
Prepare your taxes — you will need to work with your accountant to prepare all the taxes you need to pay.
File your taxes — as shown above, you will need to file your taxes once a year.
Pay payroll and sales taxes — you will need to make payroll and sales tax payments on a regular basis.
Renew business permits and licenses — your federal, state, regional and city licenses and permits may need to be renewed on a regular basis, typically once a year.
Paul is a freelance writer, small business owner, and British expat exploring the U.S. When he’s not politely apologizing, he enjoys hats, hockey, Earl Grey Tea, mountains, and dogs.