The Complete New Brokerage Startup Checklist

2026-08-21

A practical, step-by-step checklist for starting a real estate brokerage, covering legal setup, taxes, insurance, and operations with realistic 2026 costs.

Starting a real estate brokerage is a major step. You are moving from being an agent to being a business owner, which means you now handle taxes, compliance, and administration. This checklist walks you through the essential steps, in order, with concrete costs and deadlines. Follow it, and you will avoid the most common startup mistakes.

1. Choose Your Business Structure

Your business structure affects your taxes and personal liability. Most new brokerages choose one of these:

Sole Proprietorship: Easiest and cheapest, but you are personally liable and pay self-employment tax on all profits. Not recommended for a brokerage due to liability.
LLC: Offers liability protection and pass-through taxation. Costs $100-$500 to file, depending on your state. Many brokerages use this.
S-Corp: Can save on self-employment taxes if you pay yourself a reasonable salary. Requires more paperwork and payroll setup. Filing costs $100-$300, plus ongoing payroll fees.
C-Corp: Rare for new brokerages, but useful if you plan to raise venture capital or go public. Double taxation applies.

Action step: Consult a CPA or business attorney. They will help you choose the structure that minimizes taxes and protects your personal assets. Do this before you sign any lease or hire anyone.

2. Register Your Business and Get an EIN

Once you have a structure, register with your state. This includes:

Business name: Check with your state’s Secretary of State to ensure it is available. You may also want to trademark it federally, which costs $250-$750.
EIN (Employer Identification Number): Free from the IRS. You need this to open a business bank account and file taxes. Apply online at IRS.gov.
State tax registrations: Register for sales tax, unemployment insurance, and any other state taxes. Costs vary, but many states charge a small fee (often $0-$50).

Action step: Apply for your EIN today. It takes about 15 minutes online.

3. Get Your Broker License and Errors & Omissions Insurance

You must hold a real estate broker license in your state. Requirements vary, but typically include:

Experience: 2-4 years as an active agent.
Education: 60-180 hours of pre-licensing courses.
Exam: Pass the state broker exam.
Fees: $100-$500 for application and exam.

You also need Errors & Omissions (E&O) insurance. This protects you if a client sues for negligence. Costs range from $500-$2,000 per year for a small brokerage, depending on your state and coverage limits.

Action step: Check your state’s licensing board for exact requirements. Purchase E&O insurance before you hang your license.

4. Set Up Your Accounting System

You need a system to track income and expenses from day one. Options include:

QuickBooks Online: $30-$100/month, depending on plan.
Xero: $12-$65/month.
Spreadsheets: Free, but harder to scale.

You also need a separate business bank account and a business credit card. This keeps personal and business finances separate, which is critical for taxes and liability.

Action step: Open a business checking account (many banks offer free accounts for small businesses). Set up accounting software and connect it to your bank feed.

5. Understand Your Tax Obligations

As a brokerage owner, you have several tax responsibilities:

Income tax: You pay federal and state income tax on your profits. If you are an S-Corp, you must pay yourself a reasonable salary and pay payroll taxes.
Self-employment tax: If you are a sole proprietor or LLC member, you pay 15.3% on your net earnings (Social Security and Medicare).
Estimated quarterly taxes: The IRS expects you to pay taxes quarterly if you expect to owe more than $1,000. Deadlines are April 15, June 15, September 15, and January 15. Penalties apply for late payments.
Payroll taxes: If you have employees, you must withhold and pay Social Security, Medicare, and federal income tax. You also pay federal unemployment tax (FUTA).
Sales tax: Usually not applicable to real estate commissions, but check your state.

Action step: Work with a CPA to calculate your estimated tax payments. Set aside 25%-35% of your income for taxes.

6. Create a Compliance Plan

Real estate is heavily regulated. You must comply with:

State real estate laws: Includes advertising rules, trust account handling, and disclosure requirements.
Fair Housing Act: You cannot discriminate against clients based on race, color, religion, sex, disability, familial status, or national origin.
Data privacy: If you collect client information, you may need to comply with state data breach laws and, if you handle credit card payments, PCI DSS.
Trust accounts: If you handle client funds (e.g., earnest money), you must keep them in a separate trust account and follow strict accounting rules.

Action step: Review your state’s real estate commission website for a compliance handbook. Consider taking a continuing education course on fair housing and trust accounting.

7. Set Up Your Office and Technology

You need a place to work and tools to run your business. Costs vary:

Office space: $500-$2,000/month for a small office, or $0 if you work from home. If you work from home, you may qualify for a home office deduction.
Phone and internet: $100-$200/month.
CRM (Customer Relationship Management): $50-$150/month per user. Examples: Follow Up Boss, BoomTown, or kvCORE.
Website: $500-$5,000 to build, plus $20-$50/month for hosting.
Transaction management software: $100-$300/month, such as Dotloop or SkySlope.

Action step: Start with a home office and a basic CRM. Upgrade as you grow.

8. Hire Your First Employees or Contractors

You may hire agents as independent contractors or employees. This affects taxes:

Independent contractors: You do not withhold taxes, but you must issue Form 1099-NEC at year-end if they earn $600 or more.
Employees: You must withhold payroll taxes, pay unemployment insurance, and provide workers’ compensation. Payroll services cost $50-$150/month.

Action step: If you hire employees, set up payroll before their first paycheck. Use a service like Gusto or ADP.

9. Plan for Ongoing Tax Deadlines

Mark these on your calendar:

January 31: Send W-2s and 1099s to employees and contractors.
April 15: File your personal tax return and pay first quarter estimated taxes.
June 15: Second quarter estimated taxes.
September 15: Third quarter estimated taxes.
January 15: Fourth quarter estimated taxes.
March 15: S-Corp tax return (Form 1120-S) due.
April 15: LLC and sole proprietorship tax return (Form 1040) due.

Action step: Set reminders in your calendar for these dates. Consider using a tax professional to handle filings.

FAQ

Q: How much does it cost to start a brokerage? A: Total startup costs range from $3,000 to $15,000, including licensing, insurance, legal fees, and basic technology. Office space and marketing add more.

Q: Do I need to charge sales tax on commissions? A: In most states, real estate commissions are not subject to sales tax. Check with your state’s department of revenue to be sure.

Q: Can I deduct startup costs? A: Yes, the IRS allows you to deduct up to $5,000 in startup costs in your first year, with the rest amortized over 180 months. Keep receipts for everything.

Q: What is the biggest tax mistake new brokerages make? A: Not paying estimated taxes. Many new owners forget to make quarterly payments and end up with penalties. Set aside a percentage of every commission check.

The bottom line

Starting a brokerage is manageable if you follow a systematic approach. Choose the right structure, register properly, get insured, set up accounting, and understand your tax obligations. Use this checklist as your roadmap. When in doubt, hire a CPA or attorney who specializes in real estate. The upfront cost is worth the peace of mind and long-term savings. Start with the first step today: contact a professional and get your EIN. Your future business depends on it.