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Set up a separate bank account
2
Use accounting software or apps
3
Track your mileage and other deductions
4
Review your income and expenses regularly
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Here’s what else to consider
As a self-employed real estate agent, you need to keep track of your income and expenses for tax purposes, budgeting, and financial planning. But how do you do it effectively and efficiently? Here are some tips and tools to help you manage your money as a real estate professional.
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- Doug Terrell Realtor at Berkshire Hathaway HomeServices Troth, REALTORS
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1 Set up a separate bank account
One of the first steps to track your money as a self-employed real estate agent is to set up a separate bank account for your business transactions. This will make it easier to distinguish your personal and business income and expenses, and avoid mixing them up. You can also use a dedicated credit card or debit card for your business purchases, and pay it off from your business account.
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- Doug Terrell Realtor at Berkshire Hathaway HomeServices Troth, REALTORS
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As a realtor, having a business account or business line of credit offers me multiple advantages. Firstly, it allows me to maintain better financial organization by separating my personal and business finances. This makes tax reporting much easier and instills confidence in my clients. Secondly, with a business line of credit, I have the flexibility to access funds when necessary, which aids in financial planning and provides a safety net during unexpected situations. Having these financial tools at my disposal enables me to focus on growing my business and seizing opportunities in the real estate market.
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2 Use accounting software or apps
As a self-employed real estate agent, tracking your money can be made easier with the use of accounting software or apps. Look for features such as the ability to sync with your bank account and credit card, create and send invoices, generate reports and summaries of income and expenses, calculate and file taxes, or integrate with a tax software or service. Popular accounting software or apps among real estate agents include QuickBooks, FreshBooks, Wave, and Zoho Books.
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- Doug Terrell Realtor at Berkshire Hathaway HomeServices Troth, REALTORS
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I highly recommend using bookkeeping software or apps for managing finances. They offer numerous advantages, such as automating repetitive tasks, simplifying data entry, and providing real-time financial insights. With user-friendly interfaces and secure cloud storage, it's easy to access and update financial records anytime, anywhere. These tools also help track expenses, generate detailed reports, and ensure accurate tax preparation. By streamlining bookkeeping processes, I can focus more on growing the business and providing better services to my clients.
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3 Track your mileage and other deductions
As a self-employed real estate agent, you can deduct a variety of business expenses from your taxable income. For instance, you can deduct mileage for driving to showings, meetings, and other work-related activities, which can be tracked with a mileage tracker app or logbook. Home office expenses are also deductible, such as a portion of rent, mortgage, utilities, insurance, and maintenance costs. In addition, marketing and advertising costs like flyers, signs, website fees, social media ads, and online ads are all deductible. Professional fees and dues like licenses, memberships, education costs, and training costs are also deductible as well as equipment and supplies like phones, computers, printers, cameras, software, and stationery. It's important to keep receipts and records of all deductible expenses organized by category and date. You can also use an app or scanner to digitize and store your receipts.
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- Doug Terrell Realtor at Berkshire Hathaway HomeServices Troth, REALTORS
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Keeping a precise mileage log is vital, especially as a realtor, due to the IRS's requirements. Tracking my mileage allows me to claim valuable business deductions during tax season, reducing my tax liability significantly. It also ensures I have the necessary documentation and compliance with tax regulations. Additionally, monitoring my mileage helps me analyze expenses, make informed financial decisions, and set budgets for my business. Utilizing mileage tracking tools or apps simplifies the process, giving me more time to focus on growing my real estate business and maintaining IRS compliance.
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4 Review your income and expenses regularly
Finally, to track your money as a self-employed real estate agent, you should review your income and expenses regularly, and compare them to your goals and budget. This will help you identify your strengths and weaknesses, and adjust your strategy accordingly. You can also use this information to plan ahead for your cash flow, savings, investments, and retirement. You should review your income and expenses at least monthly, quarterly, and annually, and use the reports and summaries from your accounting software or app to guide you.
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5 Here’s what else to consider
This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?
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- Doug Terrell Realtor at Berkshire Hathaway HomeServices Troth, REALTORS
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As a realtor, one of the luxuries I enjoy the most is the flexibility to create my own schedule and work the hours that best suit my lifestyle and preferences. Unlike traditional 9-to-5 jobs, I have the freedom to tailor my work hours around personal commitments and family time. Whether it's early mornings or late evenings, I can accommodate clients' needs while maintaining a healthy work-life balance. This flexibility empowers me to be more productive and efficient, as I can focus on tasks when I'm most energized and attentive. Ultimately, having control over my schedule enhances my job satisfaction and allows me to deliver exceptional service to my clients.
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