I hope you made some money last year.  But, did you make any income?

That might sound like a silly question.  But, following up on my conversation with James Smith, I find that question very relevant.

Like many real estate agents, James started in real estate treating his business like a hobby.  That’s not to say that he wasn’t very professional and effective in providing real estate consulting services.  But, from a business management perspective, he started out being caught up in the traditional real estate agent model.  Even though he had years of business experience, he just never thought about the fact that since he was building a business, he should treat it like one from a management standpoint.

One of the best things he did for himself was to create a business entity for his consulting practice.  Now, he knows for sure that he has income because his company pays him a salary.  Why does that matter?

Think about going to get a loan, for example.  What does a loan officer look at first thing?  Your income.  If you’re acting as a 1099 employee of your broker, you don’t really have any income.  You might be making money, but from a loan officer’s perspective, that’s just not the same as income.

When you create a corporation of some type (Sub-S or LLC for example), you’re creating a business entity that pays you a salary, and pays for all of your other business expenses.  Now you’re a company and you can do all the things a real business does.  And, you can claim income just like back when you were working as a W-2 employee for somebody else’s company.

I’m running a small business, and from my perspective, it never occurred to me to do that without forming a corporation.  That’s why the writing at the top of the blog says “Build Real Estate Results with Getting It Write, Inc“!  And, that’s why I say that the most important thing I bring to the table is the ability to apply solid business and marketing principles to the real estate industry.   I recognized early on that the industry needed all the fresh perspective it could get to stay viable.

If you haven’t investigated how forming a real company could benefit you in the long run, do it now!