Three Topics Real Estate Agents Should Consult a Professional About
Are you a realtor whose business has taken off? Perhaps you’ve become the professional who helps others find their dream homes. Now, you’re presented with the challenge of managing a rapidly growing business. At this point, you’re likely working to sift through business tax, manage your accounting and bookkeeping, or even reinvest your profit into a retirement plan. If this is the case, our Business Advisory Services Program may be the right fit for you… continue reading below for more information.
It can be easy to feel overwhelmed by all the to-do’s for a thriving real estate business. Here are three key topics you’ll want to consult a professional about…
1. Understanding Business Tax
This alone is an expansive and sometimes overwhelming topic, so we’ll keep it simple. To understand business tax, you must consider:
Tax Entity
Depending on whether you are an S-corp or a sole proprietorship, you can be taxed differently. If you’re a sole proprietorship, you’ll file your business under your personal return and pay self-employment tax on top of your annual income tax. In contrast, if you’re an S-corp, you must file a separate business return, and you won’t pay self-employment tax on your income. Instead, you will pay yourself what the IRS considers a “reasonable salary,” and then you’ll pay self-employment tax on that salary. The remainder of your business income is treated as profit, which you would only pay income tax on. For both options, you’ll want to consult an accountant to see which entity makes the most sense for your business.
Tax Deductions
As a realtor, there are countless available deductions you can take. These can include travel expenses (mileage), commissions paid, insurance premiums, marketing costs, management fees, office supplies, and utilities, just to name a few. Working with a tax professional to determine your eligible deductions is key to saving money.
Paying Quarterly Estimates
You are required to pay estimated quarterly taxes to the IRS to avoid paying a sizable lump sum at tax time in addition to late fees. Depending on the state you live in, you may be required to pay these to the state as well. A qualified business accountant will be able to assist in determining the amounts you owe.
Opening a Business Bank Account
Taking this step will allow you to keep your business income and expenses separate from your personal expenses, making it easier to track and remain current come tax time.
Tracking Your Expenses
It’s important to keep receipts and maintain a record of individual expenses. This will avoid any confusion at tax time and adequately prepare your financials in the case of an audit.
2. Managing your Business Accounting
We know it’s important to track your income and expenses, but how are you tracking them? With an onslaught of booming sales, it might be time to graduate from the Excel spreadsheet and purchase accounting software. This might mean that you also need training on the software to understand its features and capabilities. In turn, this enables you to manage your financials once transferred from previous records. Oftentimes, these software even offer payroll features.
Additionally, if you have an increasingly hectic schedule, it might be time to have an outside source manage your bookkeeping. Having a dedicated business accountant who regularly works with your financials takes some of the pressure off you and keeps you squared away for tax time. What’s more, it’s always great to have a specialist watch out for things you might have missed and avoid paying more tax than necessary, all the while saving you valuable time you can dedicate to working on your business.
3. Saving for Retirement
You might be self-employed and thus missing out on employer-sponsored retirement plans, but there are still plenty of options for you, such as IRAs, SEP 401ks, or other tax-deductible plans. These plans will encourage you and your employees to develop important retirement savings habits, and you might even qualify for numerous tax credits in the first three years, totaling up to $16,500. With the right team and support, these plans can be incredibly easy to set up and maintain.
Save Time and Money with Business Advisory Services
Save the time and energy you could be using to close sales and let us lighten the load of managing your business finances. Our Business Advisory Services Program offers a comprehensive approach focused on planning and strategy. Topics may include implementing ‘best practices’ for running your business, understanding your financials, and capitalizing on tax efficiencies, all with the goal of seeking to maximize profitability. This program is not “one-size-fits-all” but rather a multi-faceted approach that incorporates personalized consulting sessions customized to your needs. During these consulting sessions, we examine the trajectory of your business, analyze your current state, and identify necessary steps to help achieve your business and personal goals. (Click here to learn about our Business Advisory Services.)
Interested in learning more about how to get started? Contact us now to schedule an introductory call. (Click here for contact information.) Or interested in learning more about other Business Services? (Click here to learn more.)
Blog by Debbi Kuller – Chief Operating Officer
Learn more about Debbi and the rest of the Storen Financial team here.
The information herein is general in nature and should not be considered legal or tax advice. Consult an attorney or tax professional regarding your specific situation.