After successfully completing this topic, you will be able to
• list the three types of individual licenses in real estate, and
• describe the requirements for classification as an independent contractor for tax purposes.
Brokers are the only real estate licensees who may receive a commission from a member of the public.
A broker associate is qualified to be a broker, but works under the supervision of another broker or an owner/developer. The employer must pay the broker associate, and cannot receive a commission directly from a customer. To have broker-associate status, the person must have an employer, so when the broker associate becomes inactive, he or she will be an inactive broker.
Only a broker or owner-developer can pay a commission to a sales associate. Owner-developers deal in their own property and don’t have a license. For example, an owner-developer could be a builder, or an owner of several parcels of land. An individual who works for an owner-developer is exempt from needing a real estate license if paid by salary only. Only a licensed person can receive a commission. Sales associates and broker associates may hold only one Florida real estate license.
Independent contractor status for taxes. The Florida Real Estate Commission considers a sales associate to be an employee of the broker. The broker and the sales associate may agree that that sales associate should be taxed as an independent contractor. Under this rule, the broker does not withhold income taxes or pay any employment taxes. In order to keep the status, the broker may not set working hours or methods, or pay salary or other “employee” expenses. The sales associate may expect training.