Realtor accountant in Richmond

For an unincorporated Richmond realtor, the self-employed T1 with its schedules is commonly $250 to $450. For a realtor working through a PREC, bookkeeping, payroll and the T2 with statements usually run $450 to $650 a month all-in, covering the CCA schedule on the vehicle, the small business deduction and the owner’s T4 or T5. The hub for realtors, PRECs and brokers links every related guide.

Commission income that arrives on its own schedule

A commission is earned when the deal completes, not when the offer is accepted. On resale homes that gap is weeks. On a presale unit in one of Richmond’s new City Centre towers, part of the commission may not be paid until the building is finished, which can be years after the contract was written. The result is income that lands in a different tax year from the work, and a year that looks quiet on paper while the pipeline is full. Tracking pending commissions by expected completion date is what lets the tax be planned rather than discovered.

Brokerages commonly report commission paid to an unincorporated realtor on a T4A. The slip is a cross-check, not the whole picture: the return reports what was earned, net of the brokerage split and desk fees recorded as expenses.

Working through a personal real estate corporation

BC permits realtors to earn through a personal real estate corporation. Commission paid to the PREC is taxed inside the company, at 11% combined on active business income within the small business limit. The realtor then takes out what they need as salary or dividends and leaves the rest. That deferral is the reason to incorporate. It only helps if some income is left in the company, so a realtor who spends everything they earn gains little and adds a T2, a payroll account and annual filings.

A PREC also brings discipline the realtor did not need before: a separate bank account, a shareholder loan account that is reconciled, and expenses paid by the right entity. A loan to the realtor that is not repaid within one year after the PREC’s year-end is generally taxed as personal income.

Paying yourself from the PREC

The owner of a PREC chooses each year between salary and dividends. Salary goes on a T4, carries CPP contributions and creates RRSP room. Dividends go on a T5 and do neither, but they need no payroll account. Most realtors settle on a mix after looking at the year’s commission and their personal needs, and the choice is made before the PREC’s year-end, not after. The salary versus dividends calculator shows the trade-off, and paying a spouse a salary covers the case where a partner works in the business.

Vehicle, marketing and the claims that get reviewed

A Richmond realtor drives a great deal: between City Centre, Steveston, Ironwood and East Richmond, across the bridges to Vancouver and through the tunnel to Delta. The vehicle is usually the largest deduction after the brokerage split, and it is supported by a log of business kilometres, not by an estimate. The log needs the date, the destination, the purpose and the distance. Mileage and vehicle log sets out what holds up.

Marketing, staging, photography, signage and client gifts are deductible when they relate to earning commission. Meals and entertainment are generally limited to half of the cost. The meals and entertainment rule covers the limit.

GST on commissions

Real estate commissions are taxable supplies. Once a realtor’s taxable revenue passes $30,000 in four consecutive calendar quarters, GST registration is mandatory, and a busy first year can cross that line quickly. After registration, GST is charged on every commission and the GST paid on vehicle costs, marketing and desk fees comes back as input tax credits. A realtor with a PREC registers the corporation, not the individual. The GST registration guide explains the steps.

Instalments and the April bill

A realtor with no tax withheld who owes more than $3,000 in the current year and either of the two previous years is expected to pay personal instalments on March 15, June 15, September 15 and December 15. A strong spring market can produce a large balance the following April, plus instalments starting at the same time. Setting aside a fixed share of every commission in a separate account is the simplest defence. The instalment calculator sizes the payments.

Your own investment properties

Many realtors also own property. A rental condo is reported on form T776, separately from commission income, and its sale is generally a capital gain. A property bought and resold quickly can instead be treated as business income, and the facts of each purchase decide which. Keeping investment purchases clearly separate from the PREC’s business, with their own records, protects both. Accounting for real estate investors covers that side.

Remote accounting for realtors from Abbotsford

EverStone works with Richmond businesses virtually, from a base in Abbotsford. There is no Richmond office, and nobody on the ground there. Questions go by email first, with a video meeting when it helps, and paperwork moves through a secure upload link and e-signature. Commission income, the personal real estate corporation question and expense tracking are handled together, because in practice they are one decision.