On October 1st, 2020, the Provincial government implemented new rules in Ontario allowing Realtors® to form a Personal Real Estate Corporation (PREC). PREC’s allow Realtors® to access the business advantages of incorporation, including tax and income planning benefits.
The Ontario Real Estate Association (OREA) has created a website with resources to assist Members whom are interested in forming a PREC; https://www.orea.com/Political-Advocacy/Personal-Real-Estate-Corporations
Personal Real Estate Corporations will require a new HST registration number and Business Number (ex. 123456789RP0001) allowing them to transact as a corporation.
In Showings, edit the existing agents name to include their Personal Real Estate Corporation name in both “Company” & “Does Business As” on the Details tab of the Phone List. This will ensure the agents still have access to messages, appointments, etc. received as an individual and moving forward as a Personal Real Estate Corporation.
In Commissions, if you import from Showings you will receive a prompt that the agent already exists, select YES to Continue. It will create a new agent, simply change the Payee = Company, enter the new name and complete the rest of the tabs as required; do not forget the Bonus or Withholding tabs. A new agent is required to ensure that commissions are reported correctly on a T4A.
If you do not integrate with Showings, you will need to set up a new Agent in Commissions.
Please note, if you have paid the agent previously as an individual, be mindful to select the correct name moving forward as Agents will receive a T4A as an individual and a corporation for the calendar year in which they registered as a corporation. An alternate solution would be to change the status of the Agent to Terminated with the applicable date that they are no longer transacting as an individual. This will drop the name from the list of Active Agents when attaching to transactions and still allow a T4A to generate for commission earned as an individual.
Once the new agent is created in Commissions, you will need to re-associate the new agent to existing open transactions.
If the transaction is a partial payment, you will need to void existing open transactions, attach the new agent to the main transaction (you will see 2 of each agent attached to transaction) and make edits to amounts as needed for what has already been paid to the individual and forthcoming payments to the agents’ Personal Real Estate Corporation. When edits to main transaction are completed, you can create NEW partial payment transactions for the remaining expected commission. Partial Payment Transaction
If the agent is on a tiered commission plan and in the middle of their Anniversary timeline, you will need to add relevant history on the Summary tab of the Agent Profile so commission will calculate as expected. Agent History
Finally, if integrating with QuickBooks® please remember to change any memorized invoicing, outstanding customer balances, etc. to the new name if required. You can also opt to Inactivate both the Vendor and Customer names of the individual.