As a Realtor, you're always on the go, closing deals, showing homes, and building relationships. But managing your finances? That can easily slip through the cracks. However, staying on top of your financial game is just as important as landing your next big sale. At Fulton, Brown & Co., we understand the unique financial challenges Realtors face, so we’ve put together this guide to help you track your finances like a pro.
1. Keep Business and Personal Finances Separate
Open a dedicated business bank account and get a business debit card card. Keeping your business and personal finances separate makes tracking your expenses a breeze and saves you a headache when tax season rolls around.
2. Track Income and Expenses in Real-Time
Don’t wait until the end of the month—or worse, the end of the year—to sort through receipts and expenses. By tracking income and expenses in real-time, you’ll have a clear picture of your finances at all times. Whether you prefer using accounting software like QuickBooks or a simple spreadsheet, the key is consistency. Break your expenses into categories: marketing, office supplies, education, vehicle expenses, and so on.
3. Don’t Forget to Track Your Mileage
You’re constantly driving from one showing to the next, which means you’re racking up deductible miles. Using mileage tracking apps like MileIQ or TripLog can make this process effortless. Just make sure you’re distinguishing between personal and business miles.
4. Stay on Top of Your Commissions
It’s easy to get caught up in the hustle and forget to track your commissions. As soon as a deal closes, record the commission, the date, and any associated fees. This not only helps with income tracking but also ensures you’re prepared when tax time comes.
Example: sell $250,000 home at 5% split commission. Your take home commission is $6,250 (this is what you consider your total commission. All fees associated with the firm and expenses associated with selling the property should be deducted from this number.
5. Save for Taxes—Seriously
As an independent contractor, you’re responsible for your taxes, including self-employment taxes. A good rule of thumb is to set aside 25-30% of your income to cover taxes. And don’t forget to make those quarterly estimated tax payments! Trust us, it’s better than facing penalties later.
6. Consider Professional Bookkeeping
Hiring a professional bookkeeper might seem like an unnecessary expense, but it can be a game-changer for your business. A bookkeeper can help you organize your finances, identify potential deductions, and keep everything IRS-compliant. It’s an investment that will save you time, stress, and potentially money.
7. Plan Ahead
Real estate has its ups and downs. That’s why planning for the future is crucial. Regularly review your financials to identify trends and plan for slow periods. A budget that includes funds for marketing, professional development, and savings will help you stay ahead of the game.
8. Leverage Real Estate Tech Tools
Sure, general accounting software is great, but real estate-specific financial tools like RealtyZam or BrokerSumo can streamline your commission tracking, expense management, and tax reporting. These platforms are designed with Realtors in mind, making your financial tracking even easier.
9. Know Your Deductions
Realtors have access to a wide range of tax deductions, from office rent to marketing costs, travel, meals, memberships, and home office expenses. Staying informed about eligible deductions and working with a tax professional can help you keep more of your hard-earned money.
10. Review Your Financials Regularly
Don’t just set it and forget it. Make it a habit to review your financials monthly or quarterly. This ensures accuracy and gives you insight into the profitability of your business. It also allows you to catch any potential issues before they become major problems.
In Summary
Tracking your finances is essential to the success of your real estate business. With the right tools and strategies in place, you can streamline your processes, stay organized, and ultimately keep more money in your pocket. If you’re feeling overwhelmed by the financial side of things, we’re here to help. At Fulton, Brown & Co., we specialize in making your financial management effortless, so you can focus on what you do best—closing deals.
Take control of your finances by contacting us today by clicking the button below.
Fulton, Brown & Co. is not affiliated with nor do they have a partnership with any of the companies shared above.
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