PROFESSIONAL REAL ESTATE INCORPORATION (PREC)

As a Realtor, you can now incorporate a Professional Real Estate Corporation.  Included with the McHines Turnkey Solution is a required NUANS report, Government Filings and completed Digital Minute Book. 

Check out "As a Guest"  with the required information and we will be in touch with you within the hour to start the incorporation process.  You do not have to pay anything until you authorize incorporation.

Some tips for your Corporate Name: Just your name is fine. It doesn't have to be anything fancy, or even descriptive because only RECO and your Brokerage will know about it. It does not deal with the public. Common Choices are "John Smith" Professional Realty Corporation, "John Smith" Realty, "John Smith" Real Estate.
Directors: There can be only one-You.
Shares: You can be the only Common Share holder. Family members can hold Special/Preference Shares. (This is something to ask your accountant about later)

Frequently asked questions on PREC’s

What is the structure of the PREC?

--It is a Personal Corporation. There can be only one owner, that being the Real Estate Agent/Broker

--The Real Estate Agent must be employed by a Brokerage

--There must be an agreement, in writing between the Corporation, the Agent and the Brokerage

--It must be an Ontario Corporation

--You can use a Corporation you may already have, as long as it abides by the rules of a PREC

--There can be only one Director/Officer, the incorporator, and only one equity shareholder, however there can be

   non-equity family member shareholders

--Your Brokerage would pay any commissions you earn directly to your PREC, and the PREC would pay you

Can a PREC be a brokerage or deal with Trust monies?

--No, a PREC cannot be a brokerage, cannot have a trust account and cannot hold deposits in trust

I am part of a Team~can we incorporate a Team PREC?

--No, all agents~every team member~ being paid a commission, must have their own PREC. This also applies to

husband and wife teams.

What is the difference between Salary and Dividends?

--The Salary you choose would be paid by your PREC, minus the applicable personal taxes and CPP. Salary also

allows for RSP deductions

--You can also choose to receive Dividends, which are taxed at a different rate, and are not subject to tax/CPP

   withholdings. Your Accountant will advise on what makes the more sense for you

Can I pay my kids dividends from the Corporation?

--Yes! As long as they work a minimum of 20 hours a week for you 

Does the PREC have to register with RECO?

--No, there is no registration with RECO requirement and no payment required. The agent must advise RECO

of the Corporate name and address

How is Liability handled with a PREC’s?

--PREC’s do not protect agents from any findings of negligence. Any settlement would still come out of the  

Agent’s personal insurance. Limited Liability might possibly occur in cases of loans where the agent did not

sign a personal guarantee

I already have an HST Number-How is that handled?

--Your PREC must have its own HST number. Your number will be cancelled. If the PREC owes more than $3,000

per year in HST, it will have to pay corporate HST installments 

Can I use my personal Bank Account and Credit Card for the Corporation?

--You should open a new bank account and have a new credit card issued solely for your corporation

--Keep all receipts, expense records separate for the Corporation

What are my obligations and costs to incorporate?

--You will have extra Accounting costs of approximately costs of around $2,000 per year to manage your Tax filings

--You will need to file an Annual Return every year with CRA

--Incorporation costs can run into the thousands (McHines Corporate Services charges $850.00 + HST)

--You may need to pay HST In installments

Can I incorporate now and utilize my PREC for 2020 income and expenses?

--Orea has suggested to RECO that the PREC regulations do not appear to prohibit a brokerage from paying compensation for PENDING transactions to the PREC of a Registrant and that the policy thrust of TRESA and the regulations is to ensure compliance at the time of Payment. This assumes the Realtor was a registrant at all times.