Real Estate Bookkeeping Mistakes to Avoid

If you're in the real estate business, you’ll want to prioritize bookkeeping even though it may not be top of mind, initially. Inaccurate or incomplete books can come at a high price at tax time. 

Avoid these bookkeeping pitfalls for better success in your real estate business:

• Mixing personal and business spending. Keeping a separate bank account for your business lets the IRS know your business is a legitimate separate entity and it keeps your books clean and organized for your bookkeeper and CPA at tax time.

• Lumping all your expenses together. All your expenses should be categorized so the IRS can track them properly and so your bookkeeper can detect any errors and keep things organized for tax time.

• Poor communication with stakeholders. Whether you’re working with employees or contractors, fellow agents or property investors, keep and share meticulous records of your business dealings with them. You don’t want someone knocking on your door at the end of January trying to figure out the commissions you paid them last June.

• Forgetting about estimated taxes. Estimate quarterly taxes for your business are due every April 15, June 15, September 15 and January. 15. Forgetting to pay them and waiting until you file your tax return could incur fees for late payment and a high tax bill that you might not have planned for nor do you have money for.

• Overpaying or underpaying in taxes. Keep your books up to date, know your real estate tax deductions, track your expenses throughout the year, and have a method of how you save your receipts.

• Not outsourcing to the experts. Unless you happen to be a bookkeeper who also does real estate, it’s best to do what you do best and outsource the rest. Bookkeepers put in the time to track your finances, so you can focus on running your business. They bring the expertise needed to keep all your financial ducks in a row and plan properly for taxes.

  If you need to outsource your bookkeeping, we can help. Get a free estimate here: www.harquinbookkeeping.com/estimate.