The New Jersey Real Estate Commission now gives licensed salespersons and broker-salespersons the option to form a limited liability company (LLC) or other permitted entity to receive their commissions. While this opportunity may offer business or tax advantages, it’s important to understand the rules that come with it.
To help, we’ve outlined the most common questions NCJAR members have about forming an LLC and staying compliant with state requirements.
Do I Have to Form an LLC?
No. Creating an LLC is completely optional. Brokers may continue paying salespersons and broker-salespersons directly as individuals.
Steps to Register Your LLC
If you’d like to be paid through an LLC, you’ll need to:
- Register your entity with the New Jersey Real Estate Commission.
- Submit through the online portal:
- A Standing Certificate from the NJ Department of Treasury.
- A Certified Certificate of Formation (for NJ entities) or a Certificate of Authority (for out-of-state entities).
- A Standing Certificate from the NJ Department of Treasury.
- Pay the $50 online fee.
- Wait for Commission approval before your broker can issue commission payments to your LLC.
Click here to access the NJ Real Estate Commission Entity Registration portal.
Paying Commissions to Others
An LLC may only be used to receive your own commissions from your broker.
- Team leaders cannot use their LLCs to pay commissions to other agents.
- Only the employing broker may pay commissions to salespersons or broker-salespersons.
How Many LLCs Can I Register?
Only one entity per licensee can be registered at a time.
Paying Unlicensed Staff
Your LLC may compensate unlicensed individuals such as administrative staff, marketing assistants, social media managers, or videographers. However, these staff members cannot engage in licensed real estate activity.
Keeping Your LLC in Good Standing
If your LLC falls out of good standing with the NJ Treasury—or if there are material changes such as dissolution, merger, or ownership changes—you must notify the Commission within 30 days. Failure to do so may impact your LLC’s approval to receive commissions.
Governing Rule
All commission payments in New Jersey are regulated under N.J.A.C. 11:5-4.1, which states that:
- Commissions must be paid by the employing broker.
- Salespersons and broker-salespersons cannot accept compensation directly from anyone else.
Key Takeaways
- Forming an LLC is optional.
- Only brokers may pay licensed salespersons or broker-salespersons.
- An LLC may only receive your own commissions once approved.
- Unlicensed staff may be paid by your LLC, but cannot perform licensed activity.
Bottom Line: Forming an LLC may provide business flexibility and financial advantages, but it comes with clear compliance requirements. Be sure to follow all state guidelines to protect your license and your business.
