Tax Day Resolutions
1:20 Minute Read
I bet you made a resolution or two on New Year’s Day. Keep 'em? Me neither. But now its Tax Day and if you’re like most independent contractors, you’ve waited until the last possible moment to write out that big check and send in your tax forms. In Springtime, I get questions from agents about the previous year's business. By now, it’s usually too late to do much about last year's taxes. In fact, it’s even a little late to prepare for next year because a third of the year has already passed. But either way, it’s never too late to start handling your real estate business like, well, a real business.
“As a real estate practitioner, tax forms can be your friends if you’re well prepared.”
Take some advice and make a few Tax Day resolutions:
BANKING. Keep a separate checkbook and debit card for business. Run everything (strictly business) through that account. Not only will it help keep track of business expenses, it can create an income buffer as you pay yourself weekly or monthly out of the account.
TAXES. Many agents leave this industry because of their inability to budget expenses. Whether you’re closing deals every week or only a few each year, it makes sense to make regular estimated tax payments. Sending in 15-20% of your gross commissions to the IRS will prevent you from breaking into a cold sweat when taxes are due.
MILEAGE. The standard mileage deduction is the greatest gift given to agents who spend a lot of time driving. It’s like hearing “ka-ching” each time you step into the car. Seems like real estate agents are always working which means they are always traveling with some business purpose. Keep track of every mile driven for business. To make life easier, download a mileage tracking app. I use and recommend MileTracker for iPhone.
OFFICE EXPENSE. – Everything you use in the course of business can be expensed out - Office rent, utilities, phones, advertising, office supplies, yard signs, marketing materials, meals with clients, you name it. That’s why keeping a separate banking account to pay for and keep track of those expenses is smart.
Most agents think more like salespeople than accountants – which means record keeping doesn’t sound like much fun. True. That’s why it’s important to make sure you maintain a system that’s easy, simple and convenient for you.