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socrateaser, Attorney
Category: Business Law
Satisfied Customers: 39145
Experience:  Retired (mostly)
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OK great thanks. So I would need to have adequite revenues,

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OK great thanks.
So I would need to have adequite revenues, probably 50% or so, from the non RE LLC business in order to do this.
The RE company I am with now is one of the large national residential brokerage companies, I don't think they would want work with me in this type of situation, however I would like to remaining working there and perform traditional RE broker/agent services there. Do you think I could hire another smaller private broker to represent the LLC in the RE transactions (obtaining option contracts and assinging them for a fee payable to the LLC), then pay that broker a fee or comission and avoid having to perform the activities in the name of another LLC.


Hello again,

I suggest that you re-read my previous answer. I was editing it and you may not have read the final draft. Feel free to modify this question afterwards.
Customer: replied 4 years ago.

I see your edit and that does partially address my follow up question.


What I was thinking is that the fee would be paid to the LLC for each transaction, another broker, not myself and not my principal broker would be paid a fee or commission for representing the LLC in the transaction, and I would pay myself a salary from the LLC for managing the LLC.


Do you think that would work?





The problem I foresee is that since an LLC is a "fiscally transparent" business form, you cannot avoid being paid for each transaction, because you receive the profits of each transaction, which are essentially coming from real estate deals.

If I were your broker, and I found out what you were doing, I would be inclined to terminate your contract, because you're steering business away from the broker. I doubt that a judge would find you in violation of the real estate licensing laws -- but, that won't matter to your broker -- who just wants to get a piece of your sales.

Hope this helps.
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Customer: replied 4 years ago.

Just to clairfy, when I said "... the fee would be paid to the LLC..." I was refering to the assignment fee and not the broker fee/commission. Still the same answer?





Yes. An LLC is "fiscally transparent," meaning that all profits are passed through to its owner(s). So, no matter how your LLC receives its profit, it immediately devolves to you and you will pay taxes on it as income in the year it is paid to the LLC. The only way that you could avoid this outcome would be to either form a C Corporation, or alternatively, elect under the Internal Revenue Code to have the LLC taxed as a C corporation.

But, then the income would be double taxed, and it would be locked up in the corporation, where you could not reach it, except via dividend distributions.

Hope this helps.
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