Incorporating as a Personal Real Estate Corporation (PREC) in Alberta
Are you a real estate professional or want to become one? Have you considered incorporating your business as a Personal Real Estate Corporation (PREC)? In this article, we will explore the benefits and steps of incorporating as a PREC in Alberta and why it could be a smart move for your real estate business.
What is a Personal Real Estate Corporation (PREC) and benefits?
A Personal Real Estate Corporation (PREC) is a type of legal entity that allows real estate professionals in Alberta to incorporate their business. This means that instead of operating as a sole proprietor or partnership, you can establish a corporation to conduct your real estate activities.
Increased Credibility
Incorporating as a PREC can enhance your credibility as a real estate professional. By operating as a corporation, you demonstrate to clients, colleagues, and industry partners that you are serious about your business and are committed to professional standards.
Limited Liability Protection
One of the key advantages of incorporating as a PREC is the limited liability protection it offers. As a corporation, your personal assets are shielded from any business debts or legal liabilities incurred by the corporation. This can give you peace of mind and protect your personal wealth in the event of unforeseen circumstances.
Tax Benefits
Incorporating as a PREC can also provide significant tax benefits for real estate professionals. Corporations are taxed at a lower rate than individuals, and you may be able to take advantage of tax planning strategies to minimize your overall tax burden. Consult with a tax professional to understand the specific tax advantages available to PRECs in Alberta.
Estate Planning Opportunities
Another benefit of incorporating as a PREC is the estate planning opportunities it can offer. By structuring your business as a corporation, you may have more flexibility in transferring ownership or assets to future generations. This can help you ensure a smooth transition of your real estate business in the long term.
Steps for setting up a Personal Real Estate Corporation (PREC) in Alberta:
1.Seek Professional Advice: It is recommended to seek guidance from a lawyer and accountant before proceeding to understand the legal and tax implications.
2. Select a Name: The corporation’s name should include your name and the term “Personal Real Estate Corporation.”
3. Prepare and File Articles of Incorporation: Draft and submit the Articles of Incorporation to the Alberta Corporate Registry, detailing the corporation’s structure and purpose.
4. Register with RECA: Ensure compliance with the Real Estate Council of Alberta (RECA) and register your PREC with them.
5. Obtain a Business Number: Register for a business number with the Canada Revenue Agency (CRA) for taxation purposes.
6. Open a Corporate Bank Account: Establish a separate bank account for your PREC to maintain clear separation between business and personal finances.
7. Uphold Compliance: Stay up to date with all necessary legal and regulatory requirements for ongoing operations.
