Do Realtors Need A Payroll Service

We recently received an insightful question from a local real estate agent that we think could be incredibly valuable for realtors everywhere. If you’re a realtor—or know one who’s actively working in the market—this information might be worth thousands in savings. Let’s dive into how payroll services can play a crucial role in your financial strategy.

The Question: “I’m curious if your payroll services are suitable for realtors. Do you cater to individuals, or is there a minimum number of employees required?”

Our Answer: Great question! If you’re running a business with employees, payroll management is essential, whether you handle it internally with software like QuickBooks or outsource it to a service like ours. The best part? We have no minimum employee requirements. Many of our clients have just one employee—or even none at all—and we’re happy to provide tailored payroll services for businesses of any size.

Now, here’s where it gets interesting for realtors. If you’re a realtor working solo without any employees, you’re technically self-employed as a sole proprietor for tax purposes. This setup comes with a hefty tax burden because all your income is subject to federal and state income taxes, plus self-employment taxes at a steep rate of 15.3%.

Here’s a silver lining: Once a realtor’s annual net income exceeds $40,000, there’s an opportunity to implement a tax-saving strategy involving payroll services. By setting up an S Corporation and placing yourself on payroll as an employee of the corporation, you can split your earnings between a salary (subject to 15.3% payroll taxes) and distributions (which are not subject to payroll or self-employment taxes). This strategy can lead to significant tax savings, potentially saving thousands of dollars each year depending on your earnings.

While this is just the tip of the iceberg, it’s important to understand that payroll services can indeed offer substantial benefits to realtors. For those who are just starting out, these details might not be immediately relevant. However, as your career progresses and your income grows, leveraging payroll services can be a game-changer for your financial health.

Curious about how to set up payroll for yourself as a realtor? Reach out to us at Peak Payroll, and we’ll be happy to answer all your questions and help you get started on a path to greater tax efficiency and financial success.

Feel free to contact us to set up a consultation—we’re here to help you make the most of your payroll strategy!