The Schedule C Trap: Why Your Biggest Deal This Year Might Be With the IRS

In real estate, we’re obsessed with the big numbers, what we “gross.” We talk about ‘GCI’ like it’s the only number that matters. We celebrate the $50 million year, the record-breaking penthouse sale, and the expansion into new markets (hello, California for SERHANT.!). But, after the 1099s are issued and the dust settles, a lot of agents realize that while they were busy selling the dream, they were living a tax reality that is — to put it bluntly — inefficient.

The problem with ‘playing small’

Most agents start as “solopreneurs.” It’s you, your phone and a dream. You file as a sole proprietor because it’s easy. You run everything through a Schedule C because that’s what your first mentor told you to do. But here’s the truth: What worked for you when you were doing three deals a year is a financial impediment once you hit the big leagues.

I call it the “Schedule C Trap.” When you’re a high-earner filing as a sole proprietor, you aren’t just paying income tax — you’re getting hammered by self-employment taxes on every single dollar you earn. We’re talking about a potential $10,000 to $30,000 “convenience fee” that you’re effectively handing to the government every year simply because you haven’t structured your business like a business.

In 2026, the complexity has only ramped up. Between the shifting SALT cap limits and the new surcharges on high-income filers in hubs like New York, the “wait and see” approach to accounting is no longer a viable strategy — it’s a massive liability.

Beyond the shoe box

We’ve all been there: the April 14th panic. You’re digging through glove boxes for gas receipts, charity donation receipts, scrolling through Venmo history to remember if that “lunch meeting” was for a client or a cousin, and praying your accountant doesn’t fire you.

The challenge for the modern agent isn’t just the math. It’s the rhythm. Our income is lumpy. We might go three months without a closing and then hit a six-figure payday in 48 hours. Managing quarterly estimated payments in that environment feels like trying to time the bottom of a market — it’s stressful, and most people get it wrong.

But if you want to scale — if you want to move from being an “agent” to being a “CEO” — you have to stop treating your taxes like an annual doctor’s exam that you dread, and start treating them like a quarterly performance review that can give you insights and areas to improve.

Building a corporate engine

The most successful people I know in this industry don’t do their own taxes, and they certainly don’t use a “once-a-year” person who doesn’t understand the difference between a co-listing split and a referral fee. They use a system.

They’ve made the jump to S-Corp status to save on self-employment taxes. They have automated bookkeeping that captures every Uber ride to a showing and every dollar spent on Instagram ads in real-time. They treat their personal brand as a corporate entity because, at this level, that’s exactly what it is.

This is why I’m such a fan of what the team at RLTYco is doing. They’ve essentially built an “operating system” for the 1099 professional. Instead of you having to bridge the gap between your brokerage and your bank account, they provide the infrastructure — everything from entity formation and tax planning to commission funding and healthcare. They’ve partnered with firms like Block Advisors to move agents away from the reactive “tax season” scramble and into a proactive, year-round corporate structure.

It’s about maturity. It’s about realizing that you can’t build a billion-dollar brand on a foundation of messy spreadsheets and missed deductions.

The post-mortem lesson

As we move through the heat of the summer market, don’t let the relief of being “done” with taxes lull you into another year of the same mistakes. Look at your 2025 return. Look at the “Self-Employment Tax” line. If that number makes you wince, good. Let that be the motivation to change your setup today.

The best agents in the world are those who own their time, their brand and their bottom line. Don’t work for your money only to lose it to poor planning. Build a machine that works for you.

Now, let’s get back to work. There are deals to close — and this time, make sure you’re the one who keeps the commission.

Ryan Serhant is the founder and CEO of SERHANT., the most-followed global brand in real estate.