A real estate brokerage is a firm wherein real estate agents perform real estate transactions under the tutelage of a broker.
Real estate brokerages can vary in size, ranging from as little as one person to innumerable agents. However, there must be at least one real estate broker on file for a company to be called a brokerage.
Real estate brokerages fall under the following categories:
Sole Proprietorship. These typically smaller, locally owned businesses are the most common type of brokerage. Both brokers and agents can own property as a sole proprietorship. However, all transactions must still go through a broker. Sole proprietors can prepare Schedule C, D, or E to document business and income expenses.
Corporation. These are typically medium and large-sized real estate brokerages, although they can include small size firms as well. The broker of record at a corporation is called the broker-officer. Real estate professionals must submit the following in order to file as a corporation: corporation license application and fees, statement of officers filed with the Secretary of the State, and a filed Articles of Incorporation.
Partnerships. Real estate partnerships are formed between two individuals, one of which is a real estate broker. Each additional branch office that is added in a real estate partnership requires an additional licensed real estate broker.