Being a real estate agent can be both rewarding and challenging. It’s a great feeling to connect someone with their dream home or property, but running your own real estate business involves managing a lot of moving parts, including bookkeeping. Thankfully, real estate bookkeeping doesn’t have to be challenging. By implementing a few key processes and practices into your bookkeeping, you can feel confident in your real estate business’s financial standing.
What Should a Real Estate Agent Track for Accounting?
Bookkeeping is all about recording your business’s day-to-day transactions. These transactions can include recording all financial transactions, such as debit and credit card expenses, issuing invoices, and managing all payroll duties. And for real estate agents, bookkeeping might also involve:
- Office expenses, such as rent and supplies
- Commission income
- Mileage travelled
- Real estate continuing education expenses
- Association fees
It’s critical that you keep up with your real estate agency’s bookkeeping to ensure a solid understanding of your business’s financial standing and operations. To help we have compiled some tips on developing a good bookkeeping strategy for your real estate business from our own experience.
Read More: Selecting The Best Business Entity For Real Estate Agents
Real Estate Bookkeeping Tips
Your bookkeeping process doesn’t have to be complicated. In fact, by implementing a few best practices, your real estate bookkeeping can help you be more proactive and organized when it comes to your business’s finances.
SEPARATE PERSONAL AND PROFESSIONAL EXPENSES
You absolutely want to avoid using a single account for both personal and business expenses. This is called commingling, and it could lead to an audit. Thankfully, you can avoid this – and any bookkeeping confusion – by keeping separate bank accounts and debit and credit cards for your business and personal expenses. This will not only provide asset protection, but will also make your real estate bookkeeping process more efficient in the long run.
TRACK ALL EXPENSES AND INCOME
It’s vital that you keep track of your daily expenses. And don’t stop at tracking – you should also be itemizing each expense into an IRS-defined category, such as advertising, commissions, or insurance. After itemizing each expense, make sure to provide and file documentation, such as recipients or invoices, in monthly or quarterly folders to make for easy reference.
RECONCILE YOUR ACCOUNTS ON A MONTHLY BASIS
Owning a real estate business means you’re managing a lot of moving parts, and it can be easy to make a mistake in your bookkeeping. Thankfully, by reconciling your accounts on a monthly basis, you can ensure that your recorded transactions match the actual amounts. And if you do this process on a monthly basis, it’s easier to resolve any issues that might arise – plus, it keeps you aware of how your real estate business is performing.
Read More: Accounting Tips For Small Businesses
Should a Realtor use a Bookkeeping Service?
As a real estate agent, using a bookkeeping service to do your accounting and any payroll plays a major role in staying organized, managing taxes, and making smart financial decisions for your business. Choosing to outsource your bookkeeping provides you with the free time to pursue the growth of your business and your business networks. With this comes the peace of mind that your financial state is in order, that you have an understanding of your business growth, and have a plan for taxes.
At 4Corner Business Services, we provide comprehensive accounting and bookkeeping services for your real estate agency. And our team can support your business in other ways, too. Our Business Tax Advisors can help you with business planning, tax preparation, and more. Contact us today to learn more about our bookkeeping services for your real estate agency.
