Chapter 15 Business Management Practices

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New Jersey Real Estate for Salespersons and Brokers

By Marcia Darvin SpadaThomson/South-Western

Copyright, 2006

Chapter 15 Business Management Practices

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Chapter 15

Business Management Practices

Chapter 15 Business Management Practices

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Chapter 15 Key Terms

Accrual method

Broker of record

Cash method

Commingling

Company dollar

Employing broker

Errors and omissions

insurance

Independent

contractor

Journal/Ledger

Negotiable instrument

Short-term rentals

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Brokerage Firm Business Organizations

Individual broker

(sole proprietor)

Limited partnership

Partnership

Corporation

Limited liability

company

All business names must

be submitted in writing

for approval to the REC

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NJ Brokerage Office Requirements

All broker’s and

salesperson’s licenses

must be displayed

Branch offices must be

supervised by a broker

or broker-salesperson

Professional liability

insurance - called

errors and omissions

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Accounting Practices for the Brokerage Firm

Company dollar

Portion of revenue that

ends up belonging to

the brokerage firm

Commingling

Mixing the funds of

others with the

business of personal

account

Trust or escrow

account For all

monies received

from clients such as

deposits and down

payments

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Employment Practices and Licensee Supervision

Broker responsible

for actions oflicensee

Brokers mustsuperviselicensees

Written employment agreement

between broker and

salesperson

Brokerage firmrecords must be

maintainedfor 6 years

Chapter 15 Business Management Practices

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Chapter 15 Business Management Practices

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Comparison of Employee and Independent ContractorEmployee Independent Contractor

Receives a salary No minimum salary

Broker withholds social security,income and unemployment tax

Salesperson pays taxes

Broker can pay for extras Sets own hours

Pays for most expenses-receives no extra compensation

Enters into contract with broker