There’s nothing better than being able to save a little extra time and money as a real estate agent. Finding an efficient and cost-effective way to take care of your real estate bookkeeping and accounting is imperative to doing just that.
First, let’s make a distinction between bookkeeping and accounting. Sometimes the terms are used interchangeably, but that is incorrect. Bookkeeping and accounting are two parts of the same financial cycle.
Bookkeeping involves the recording of daily transactions for your business including:
- Posting debit and credit card expenses
- Recording all financial transactions
- Issuing invoices
- Balancing bank accounts and checkbooks
- Payroll duties
Accounting is a higher-level process that takes all of your bookkeeping information and makes sense of it by creating financial documents that give you insights about your business. Accounting includes:
- Preparation of financial statements
- Profit and loss reports
- Financial analysis of the company—operational costs, determining where money can be saved, and analyzing financial data over time
- Filling out small business tax forms and returns.
So how can you save time and money on these two time-intensive tasks as a real estate agent or realtor? Here are a few tips to help you out:
- Do it right the first time.
If you’re managing your real estate business bookkeeping and accounting yourself, don’t take shortcuts thinking you’ll save time or money. Turn bookkeeping into a regular habit, just like checking your email each day or setting weekly goals for yourself. Decide how often you’ll take care of bookkeeping tasks—ideally at least once per month, and set aside time specifically for this task
- Keep all records.
The golden rule for any accurate small business bookkeeping. Whether you prefer hard copy receipts or everything digital, find the quickest, easiest, and safest place to keep your receipts and financial records. Keep a folder or envelope in your office, car and/or wallet where you put all your business receipts. If you prefer a digital method, you can take photos of receipts and upload them to an app such as Expensify or Hello Expense.
- Familiarize yourself with common accounting terms.
Accounting jargon can sometimes seem like another language, especially if you’re not familiar with business accounting. Terms like accounts receivable, balance sheet, cash flow, ledger, accrual, and Return on Investment aren’t words that often grace everyday speech. Learn the basic business accounting terms and what they mean, here.
- Keep business and personal accounts separate.
Nothing creates a financial mess at the end of the year quite like personal or business expenses charged to the wrong account. By keeping your realtor business and personal accounts separate, your bookkeeping will go much more smoothly and you’ll be able to keep your business’ professional image in tact. For end-of-year accounting, you will need to review your personal account for possible business deductions such as portions of your phone bill or even your mortgage payment. Meanwhile, keep small business purchases on a personal account to an absolute minimum.
- Invest in bookkeeping software that’s right for you.
If you plan to manage your own business accounting and bookkeeping, you’ll likely end up needing more features than an excel spreadsheet can provide. Research several types of accounting software and find one that fits your needs. Some are tailored to realtors specifically, but many realtors find success using general accounting software such as Quickbooks. Remember, you can always try our Quickbooks alternative.
- Hire an accountant.
If you really wanted to, you could probably tackle any accounting or bookkeeping question that came your way. However, most realtor and real estate agents find that it’s not worth their time to spend hours each month doing bookkeeping when they could be focused more on the money-making aspects of their business. Instead of trying to muddle through on your own, you’re better off to hire a professional accountant to take care of your small business accounting needs. Not only will an accountant save you time, but they can also save you money by finding more business deductions during tax season, catch any accounting errors you may have made or overlooked, and advise you on how to save or invest your money. Vyde provides bookkeeping and accounting services for realtors and real estate agents, and unlimited accounting advice from real CPAs, all for less than $100/month. Give us a call today, we’d love to discuss your real estate agent accounting questions.
Other posts that might interest you:
How to Legally Structure a Real Estate Partnership or Agency
How to Track & Separate Business and Personal Expenses as a Realtor or Real Estate Agent
The Top 10 Tax Deductions for Realtors and Real Estate Agents
What You Can and Cannot Deduct for Advertising Your Real Estate Business
Top 4 Tips on Tracking Mileage and Deducting Vehicle Expenses as a Real Estate Agent
How to Calculate Self-Employment Taxes for Real Estate Professionals and Agents
How to Develop an Exit Strategy for Your Real Estate Agency Partnership
How to Develop a Succession Plan for Your Real Estate Partnership
