Real estate agent business setup is one of the most important steps when starting your career. Becoming a real estate agent is more than just selling homes—it’s about building a business. But before you start scheduling open houses and posting listings, it’s critical to lay a solid foundation behind the scenes.
A proper real estate agent business setup can help you stay organized, meet legal requirements, and avoid tax surprises. At James D. Miller, CPA, we guide new agents through smart financial decisions that set them up for long-term success.
Here’s how to get started the right way.
1. Choose the Right Business Structure
Many real estate agents begin as sole proprietors, which is the simplest structure. However, as your business grows, you may want to consider forming an LLC (Limited Liability Company) or even electing S Corporation (S Corp) status for potential tax advantages.
Here’s a quick overview:
| Structure | Pros | Cons |
| Sole Proprietorship | Easy to start, no formal setup | No liability protection, taxed as self-employed |
| LLC | Limited liability, flexible tax options | State filing fees, annual maintenance |
| S Corp | Potential self-employment tax savings | Requires payroll, formal setup, IRS filing |
Pro tip: You don’t have to decide right away, but understanding your options early can save you money later. A CPA can help you choose the best path based on your income goals and risk level.
2. Register Your Business Name (If Needed)
If you plan to operate under a name other than your legal name (for example, “Coastal Living Realty”), you may need to file a DBA (Doing Business As) or fictitious business name with your state or county.
This is often required for:
- Marketing purposes
- Opening a business bank account
- Complying with state licensing laws
Make sure to also check your state’s real estate commission requirements for naming conventions and advertising rules.
3. Get an EIN (Employer Identification Number)
Even if you don’t have employees yet, it’s smart to apply for an EIN from the IRS. This free, 9-digit number acts like a Social Security number for your business.
You’ll need an EIN to:
- Open a business bank account
- File tax returns
- Pay contractors or assistants
- Establish credibility with vendors
You can apply online in minutes at irs.gov.
4. Open a Business Bank Account
Never mix personal and business funds. Once you have an EIN and registered business name, open a separate checking account and credit card specifically for real estate income and expenses.
Why this matters:
- Keeps your bookkeeping clean
- Makes tax filing easier
- Protects your legal liability (especially if you’re an LLC)
You’ll also appear more professional when paying vendors or collecting payments from clients.
5. Set Up a Bookkeeping System
From day one, track your income and expenses. You can start with a simple spreadsheet or use accounting software like QuickBooks, Wave, or Xero.
Key things to track:
- Commissions received
- Brokerage fees
- Marketing and advertising costs
- License and continuing education fees
- Business mileage
- Home office expenses
At James D. Miller, CPA, we help real estate agents create bookkeeping systems that match their business size and comfort level.
6. Understand Your Tax Obligations
As an independent contractor, you’re responsible for:
- Paying self-employment tax (Social Security and Medicare)
- Making quarterly estimated tax payments
- Filing a Schedule C with your personal tax return (or Form 1120S if you elect S Corp status)
Set aside at least 25–30% of each commission check for taxes. A CPA can help you calculate how much to pay and when.
7. Protect Yourself with Insurance
Even if you’re just starting out, don’t skip business insurance. At a minimum, consider:
- Errors & Omissions (E&O) insurance
- General liability insurance
- Cybersecurity insurance (if you store client data digitally)
These policies can protect your assets if something goes wrong in a transaction or if a client files a claim against you.
8. Create a Simple Business Plan
You don’t need a 50-page document, but a basic business plan can help you focus your time and resources wisely.
Your plan should cover:
- Your niche or target market
- Marketing and lead generation strategy
- Expected expenses and income
- Short- and long-term goals
Knowing your numbers from the beginning will help you grow more strategically—and avoid burnout or financial surprises.
Final Thoughts
Your first year in real estate can be overwhelming, but setting up your business the right way doesn’t have to be. With the right structure, tools, and financial guidance, you can stay compliant, reduce stress, and keep more of what you earn.
At James D. Miller, CPA, we help new real estate professionals take control of their business finances—whether you’re setting up an LLC, managing quarterly taxes, or looking for ways to maximize deductions.
Ready to get your real estate business set up right? Contact James D. Miller, CPA for a personalized consultation.