Real Estate Agents
Being a realtor in today’s hot real estate market can offer a fast-paced career built for entrepreneurial people. Most realtors are 1099 contractors working for a larger brokerage, which gives them the freedom to operate generally in the manner that works for them. A mistake realtors often make is not treating their real estate business as just that: a business. Realtors are juggling inbound leads, showings, listings, marketing, networking, and a slew of other tasks that are necessary to keep organized and succeed. Many realtors overlook the accounting portion of their business. There are a plethora of tax deductions and advantages available to realtors. Here are some tips to stay organized and ready for tax time:
Create a Business Entity
Being a 1099 contractor technically means a real estate agent is self-employed. Setting up a simple LLC can provide you with multiple tax advantages as well as protection for personal assets. Some realtors could also consider taking the S-corp LLC designation, which provides even more tax advantages. Each situation is different, and consulting with a business formation lawyer or CPA is always a good start.
Create a Separate Business Bank Account
After an LLC has been formed, creating a business checking account will ensure that at tax time, all business expenses will be accounted for and properly deducted. This will also streamline the accounting or bookkeeping maintenance that needs to be done periodically. Using a separate business bank account will provide clarification on your expenses and how to deduct them.
There are many accounting softwares available ranging from free to several hundred dollars a month. The best all-around accounting software with a robust selection of integrations is Quickbooks Online. Quickbooks is the industry leader in this space, providing the most value for the cost, and constantly evolving to streamline the bookkeeping process. Quickbooks makes it easy to know exactly how your real estate business is doing, where your money is going, and how much money you are actually making. Not to mention the ease of use for accountants and CPAs to be added on to your company. If managed properly, Quickbooks will make tax time a breeze for your CPA.