PREC Real Estate Incorporation Services
CLAIM YOUR BUSINESS AND YOUR TERRITORY
Real estate can be a rewarding business — but without the proper legal strategy, real estate agents can be hit with unnecessarily high taxes. By forming a Personal Real Estate Corporation (PREC), real estate agents and brokers can proactively protect their future real estate careers.
The Benefits of Real Estate Incorporation
Without proper planning, independent real estate professionals may be surprised to find that a significant portion of their income goes to taxes. By incorporating your real estate business with a Personal Real Estate Corporation (PREC), you’ll enjoy all the benefits of incorporation, including a lower tax rate, the opportunity for tax deferral and income splitting, and additional tax deductions.
Maximizing Your Real Estate Business Potential with PREC
Real estate professionals, from agents to brokers, are always seeking ways to optimize their business operations and financial planning. Incorporating your real estate business as a Personal Real Estate Corporation (PREC) offers a strategic approach to managing your professional finances, enabling you to take advantage of various corporate benefits.
Why Use a Lawyer to Set Up Your Real Estate Corporation?
The incorporation process involves multiple aspects that can be confusing and time-consuming. A lawyer can assist you through the entire process, from drafting important legal documents, to ensuring requirements are met, and adhering to laws and regulations.
At Parr Business Law, we are here to help make the entire process easy for you. We ensure every step, from eligibility checks to incorporation and registration, adheres strictly to provincial Real Estate Council regulations and legal mandates.
We believe in efficiency and aim to create peace of mind for our clients. By having our legal professionals manage the setup of your corporation, the process becomes more streamlined and less stressful for you. Our goal is to provide clients with the reassurance that your corporation is being set up correctly.
How to Set Up a Personal Real Estate Corporation
Creating a PREC involves several key steps, each crucial for ensuring legal compliance and optimal structuring:
Eligibility Check: Verify that you meet all the requirements set by your provincial real estate council for owning a PREC.
Name Approval: Choose a unique name for your corporation, which must then be approved by the real estate council.
Articles of Incorporation: These documents outline the structure of your corporation, including share classes and any restrictions specific to real estate corporations.
Incorporation and Registration: File your incorporation documents with the relevant provincial registry and obtain a corporate number.
Opening Corporate Bank Accounts: Set up banking arrangements for your new corporation to handle all business transactions.
Accounting and Bookkeeping Setup: Implement an accounting system for your corporation to manage finances effectively.
Post-Incorporation Considerations
After establishing your PREC, continuous management and compliance are vital:
Annual Filings: Stay on top of annual reporting requirements to maintain good standing.
Tax Planning: Regularly consult with tax professionals to optimize your corporate tax strategy.
Legal Compliance: Ensure that your corporation complies with all provincial real estate regulations and laws.
FAQs
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As real estate agents are often high-income earners, it may be beneficial to set up a holding company alongside a Personal Real Estate Corporation. You should consult with your tax advisor to determine the optimal structure for you.
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The first step in forming a PREC is identifying who will serve as director of the company and what share classes are required. Consulting with other business advisors such as tax advisors or accountants is also advised. The final steps in establishing a PREC are registering a corporate name and drafting the articles of incorporation or corporation bylaws that will govern the company. Special attention must be paid to the Articles of Incorporation of a PREC, the share structure, and the issuance of shares to ensure that the PREC is compliant with the regulations under the Real Estate Services Act. If you intend to make investments from your PREC, you should be aware that passive income generated (e.g., from real estate holdings) will reduce the eligible small business deduction (SBD) and there are complex rules respecting the association (sharing) of the SBD between related corporate entities that you should obtain advice on.
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Once all the required information is gathered, PREC formation can be processed as quickly as 3 to 5 days.
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Before starting the process of establishing a Personal Real Estate Corporation, you’ll need to gather contact information for all directors and shareholders, including legal name, date of birth, occupation, citizenship status, tax residency, mailing address, email address, phone number, and copies of government-issued photo ID.
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Forming a PREC can impact your liability as a real estate professional. One of the primary benefits of a PREC is the separation of personal and business assets. This means that in the event of legal action against your corporation, your personal assets are generally protected. However, it's important to note that this protection is not absolute. In cases of professional negligence or wrongful acts committed by you as an individual, you may still be held personally liable. Therefore, while a PREC offers a layer of protection, following all laws and regulations is still crucial.
Ready to Incorporate Your Real Estate Business?
SCHEDULE A FREE 15-MINUTES CONSULT CALL
When it’s time to incorporate your Canadian real estate business, Parr Business Law can help you navigate the process of forming a Personal Real Estate Corporation with confidence and clarity. Our lawyers have the specialized knowledge to provide you with reliable and candid legal advice so you can hold onto more of your hard-earned profits. Schedule a free consultation call with us today to get started.