The short answer? Yes.

Am I saying that because I am a bookkeeper...no. But maybe...because I am partial. :)

As a busy and successful REALTOR®, you really should be keeping up with your commissions and expenses monthly. This means having a good software to use to track all of this and a way to categorize and reconcile it. If you are like many other real estate agents, time is of the essence in getting a property on the market and sold. The closing is around the corner and you have repairs to help schedule. The last thing on your mind is trying to keep up with your back office financials. And if you asked, "well, what would you know about being a REALTOR®?," I used to be one. So I understand the hustle and the demand to keep up with all the things.

So where do you start? What should you do?

There are a few options for you. You can go at it yourself and learn as you go. Or you can hire a professional to take that burden off your shoulders. Hiring a professional like myself and Magnolia Bookkeeping & Notary Services, takes the burden off sitting down with receipts and expenses each month and making sure you are categorizing them correctly. It assists with having someone know what is and isn't tax deductible. If you need a mobile notary for that closing on the other side of town you can't get to at 7:00p, we offer that service too!

But...if you choose to take the path on your own, make sure you are setting yourself up for success.

• Make sure you have a business set-up to keep your personal and professional funds separate. This allows someone to sue only what the business has as income/equity, not take your house. 
• This can be done by going to your local SCC website and seeing what business names are available and file for an LLC. You can elect to be an LLC and be taxed as an S-Corp, but you would have to pay yourself as an employee of that business and issue yourself a W2 and "reasonable wage". If you are a LLC/Sole Prop. you can do owner's draws that will pay you from your business. This is as simple as writing a check to yourself or just transferring to another account.
• This is a service we offer; to help those that need to get this set up.

• Keep your personal and business expenses separate. If I can give you one tip at all...DO NOT commingle your finances. It flags the IRS, but also makes it much harder for you at tax time to know what you spent that is deductible as a REALTOR® and what you spent on personal expenses. Keeping things separate seems like it would be common sense, but many small business owners start with a hobby, or a side hustle and then BAM! They are business owners...they don't think about separating because what isn't broke, don't fix it. However, making sure you have a separate account is the biggest advice I can give. It doesn't have to be a business checking (unless you are no longer an LLC-per upcouncel.com "...partnerships, and corporations all need a separate business bank account. The reason for this is that these types of business entities are taxed separately from the owners. When it comes to corporations especially, business and personal finances need to be conducted completely on their own. To avoid being sued or held responsible for corporate liabilities, keep checking accounts for business and personal use separate. Failing to do so could be disastrous.") Many REALTORS®/Real Estate Agents are LLC/Sole Prop. and will file their business taxes with their personal. But even so, having a separate account is best practice.
• Many banks you can have your checks printed elsewhere and you can still look professional, putting your business name on your checks.
• Having a personal checking account verses business checking account allows less fees and most of the time, no minimum balance. As your business needs change and grow, you can always get a business checking. But start somewhere! One personal and one "business" only account.

• Make sure to have good accounting software to track commission and expenses. I am partial to Intuit QuickBooks Online, but there is also Wave, Intuit Mint (this one is geared more to the personal accounting), NetSuite, and Sage. Just to name a few.
• If you are looking for a QuickBooks Online subscription, Payroll or more, please check out my link here: Complete Business Group.
• We also offer wholesale rates/discounts for those that become clients.

• Make sure you keep receipts for big purchases. Especially repairs and maintenance.

• If you are paying contractors for services, such as repairs or cleaning, make sure you get their W9 completed and on file BEFORE you issue payment. As a business owner, you need to make sure that you are sending out 1099s each January to those contractors that are Sole Proprietors.
• I like to use Track1099.com. There is a small fee for filing each one, but they also mail to those that you don't have their email to e-send to. They also electronically e-file the 1099 with the IRS for you.
• This is also a time-saving service that I offer clients as well.

• Are you an investor too? Have rental properties? Make sure that you are accounting for your mortgage payments and rental income. If you have a property management company doing the collection for you, that is great as well. But that income and all the expenses associated with it should be recorded on your books as well. This means all rental income, any repairs and maintenance, and expenses should be part of your recording as well. This can be done manually with a journal entry, but most be recorded so that the debit and credit equals the same amount to record. This can be a step that some are not familiar with. Having a professional assist in this is best practice.
• Obtain a report from your property management monthly or at least end-of-year to record all rental income and expenses.
• On your own books, make sure that you are recording the purchase of the property (using the ALTA) and the mortgage opening balance.
• Each time you pay the mortgage, make sure to record it towards the mortgage liability.
• Each time you receive rent from your tenant, make sure to record it as rental income.
• Any repairs and maintenance are expenses that are particular to that property. So if you have more than one rental property, class tracking can come in handy to account for each one.
• Same as above, if you pay contractors to flip houses or do maintenance, but sure to get signed W9 BEFORE issuing payment to be able to issue 1099s.

As you can see, there is a lot that goes in to doing your books properly. It can be time consuming and even more so if you have not done it in a while. If you look at your box of receipts and want to cry, or you can't think of anything worse than balancing your books...then we are here to help.

Always know, there is never "too far back" to come back from. If you have avoided doing your books for taxes since 2018, you can still get caught up and file up to 2021. It will more than likely be expensive, but you can do it. If you never filed an extension with the IRS, there will be more penalties. And the longer you wait to file your taxes, the more penalties and interest you are accruing. Better late than never is the idea here!

I hope that this post was informative for you and serves to help you. If you have any questions, please feel free to reach out below and we will get back to you!