These recommendations should be completed when there is new market center ownership that has resulted in the starting of a new legal entity yet Market Center name and number will remain as the original.
You will need to get a copy of the new ownership agreement, i.e., were the assets purchased by the new owners or are they transferring over, same with liabilities and the cash. Whatever the agreement indicates to move with the new ownership is what comes over to the new books, (which more than likely they will need to get the start-up entry from their CPA’s).
Legal fees to change entities are NOT booked as organizational costs. This would be below the line expenses to the new owners.
Items to be completed (when applicable) within 30 days of ownership transition:
- Finalize ownership agreement and submit to KWRI for approval
- Establish appropriate real estate licensing for new entity and/or brokerage, check with local real estate boards for regulations (i.e. legal entity name, TIN and/or other Federal/State requirements.)
- Transfer current associate licenses to the new license. Notify all associates of any applicable changes regarding transactions and/or identification updates.
- Complete all Bank Reconciliations as of “effective date” in existing AccountEdge file
- Open new ownership bank accounts and transfer funds as deemed by ownership agreement, purchase new checks, deposit slips, etc.
- Review Balance Sheet as of “effective date” and any additional resources with new ownership CPA; CPA will utilize Balance Sheet, depreciation schedule and ownership agreement to allocate assets, liabilities and equity according to new and/or remaining ownership
- An email with instructions to reset the Loss Carry Forward Period (LCF) and a new Account Edge (if US or Quebec) file will be sent once all documentation is completed and approved by Compliance. Once approved complete steps to save new AccountEdge file to begin tracking new ownership records (Note official “effective date” noted on approval from KWRI, this date will be the final date in the existing AccountEdge file and the start date in the new AccountEdge file identify new entity name, tax identification number, federal, state and/or real estate licensing updates (if applicable, see ownership agreement).
- In AccountEdge, update the Company Name and Tax ID under Setup>Company Information.
- In WinMORE, update the Company Name and Tax ID using these instructions: Change WinMORE Defaults.
- Complete all opening entries within new AccountEdge data file. ***Only enter data in the new AccountEdge file using the current month *** DO NOT BOOK TO OPENING BALANCE. Use Journal Entries to book all entries.
- Complete and review a KW Financial Statement as of current month in new AccountEdge file to verify all Balance Sheet totals balance andonly current month data appears on the Profit and Loss Statement (i.e. Current Actual matches YTD Actual)
- No adjustments are required for transmittal as this is an entirely new entity
- Transfer and/or establish E&O Insurance, Contents Insurance, all contracts including but not limited to Market Center space lease agreement, copier lease agreements, any recurring subscriptions and/or contracts to new entity ***See ownership agreement and/or consult with OP to verify details***
- Update bank account information with KWRI finance department for KWRI items (i.e. KWRI transmittal invoice, KW Connect, MAPS Coaching contracts, etc.)
- Identify any updates to payroll and/or payroll service companies
- Update any online password/access as deemed by ownership agreement
- Complete first Transmittal with new AccountEdge data file
- Completion of 1099s for the current year will result in some associates receiving two 1099s (i.e. prior ownership and new ownership). Using the reports saved in #2 below, update the 1099 to remove commission income received from prior ownership (i.e. January to effective date of ownership transition). Please consult your CPA or Tax Professional for assistance completing your 1099s if needed.
- Change the company name and tax id to the old entity.
- Using WinMORE, the 1099 data for the prior tax I.D. will need to be export and then printed using a 1099 service provider. Use the following Ad Hoc Reports:
- Report #1 Located in Associate Transactions folder – “Closed Price, Agent 1099, GCI, Co Dollar, Units by associate.txt”
- Report #2 Located in Misc folder – “ DA closed Outside Referrals with TIN.txt”
- Report #3 Located in Misc folder – “DA closed co-broker information.txt” (if applicable).
- Change the company name and tax id back to the new entity.
Be sure to use January 1st of current year and the effective date of the ownership transition as the “end date” of these reports. It is recommended to print AND save as a text file to assist with Year End 1099s.