How Tennessee Agents Can Be Paid Through an S Corporation

How Tennessee Agents Can Be Paid Through an S Corporation

In Tennessee, brokerages can pay real estate agents through an S Corporation (S Corp), provided certain conditions are met. Tennessee Code § 62-13-315 allows a broker, affiliate broker, or other licensed real estate professional to receive compensation directly to a business entity that:


  1. Is solely owned by the licensed individual; and
  2. Has been formed specifically to receive compensation earned by that individual for acts regulated under the Tennessee Real Estate Broker License Act.  

This means that a licensed real estate agent can establish an S Corp to receive their commission payments, as long as they are the sole owner and the entity is formed for the purpose of receiving compensation for their licensed activities.


Considerations for Brokerages

Brokerages are permitted to pay commissions directly to such business entities, including S Corps, as long as the agent is the sole owner and the entity is appropriately formed. 

Tax and Compliance Implications

While the legal framework permits this arrangement, both the agent and the brokerage should be aware of the following:


  • Business Tax Obligations: Entities receiving compensation for real estate services may be subject to Tennessee business tax on their receipts.  
  • Employment Classification: The agent must be correctly classified as an independent contractor, not an employee, to maintain the integrity of the S Corp structure.

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