IF YOU’RE A REALTOR, YOU already know that you’re not just a salesperson - you’re a business owner. That means you have to treat your finances like one. And as we enter the new year, it’s time to get serious about your financial records. You don’t want to be scrambling come tax time or, worse, leaving money on the table because you didn’t prepare properly. So, here’s what you need to do as a business owner to ensure you’re set up for success. GET YOUR FINANCIAL RECORDS IN ORDER First off, keep your financial records up to date. If you’re simply checking your bank balance to see if there’s enough to cover expenses, or a need to send out some bills, you’re doing it wrong. Bank balances don’t give you the full picture. Your business’s financial health goes beyond the bank account and credit limits on your cards. Get those invoices, receipts, and transactions into your accounting system and properly categorized - whether that’s QuickBooks or another tool. Clean, updated financial records are imperative. Not only are clean financials the foundation of your business, they are also critical for filing accurate tax returns. At a minimum, you should reconcile and know your exact position monthly, with a goal of daily accuracy being set. This isn’t just about avoiding a headache at tax time - it’s about being able to make informed business decisions throughout the year. You need to know exactly where your finances stand so you can plan accordingly. MAXIMIZE YOUR DEDUCTIONS Next up: maximize your deductible expenses. What tools, software, office equipment, and other assets are you purchasing in order to run your business? Make sure those purchases are entered into your system to reduce your taxable income. Do you own properties yourself, and are you fully aware of deductions, and all the rules surrounding real estate exemptions, or passive and active losses? Also, for larger purchases (a car, for example), know the right time to buy. There are tax benefits like Section 179 that can help you write off large purchases right away. Consult with your CPA for guidance before making a big purchase in order to understand and mitigate the potential tax consequences. All of this said - don’t just buy to reduce your taxes. Makesure it’s something that’s actually useful to your business. The better your financial records are, the easier it will be to take advantage of these deductions and accelerate your future. So, know your numbers before making any big purchases. TIME YOUR INCOME Here’s something a lot of people miss: timing your income. If you’re working in a seasonal market or have fluctuations in revenue, you can take advantage of smart planning to optimize your taxes. Evaluate your income timing. If you’re having a great year and you’re close to the end of the fiscal year, you might want to defer income into the next year to help reduce your current year’s taxable income. Don’t just react to your income. Plan for it. If you’re getting a big payout at the end of the year, talk to your CPA. You may want to consider pushing the income into the next year, if you can, or moving forward sooner on your next goal to manage your tax liability. CONTRIBUTE TO RETIREMENT PLANS This is a no-brainer but often overlooked: contribute to your retirement plans. You can reduce your taxable income by making contributions to a solo 401(k), a SEP IRA, or a Roth IRA. Not only will this help you lower your tax bill, but it’ll also set you up for financial security in the future. But again, there are cash flow concerns, limitations, and timing rules. The earlier you contribute, the better. And if you haven’t already maxed out your contributions, do it now. You can contribute up until mid-April, but the earlier you do it, the better off you’ll be when it comes time to file your taxes. Plus, those contributions will have more time to grow. SET FINANCIAL GOALS AND BUDGET FOR THE NEW YEAR Ensure you’ve got a clear plan in place for the year ahead. Set financial goals for your business, whether that’s growing revenue WHAT YOU NEED TO KNOW ABOUT YOUR FINANCIAL RECORDS AS A BUSINESS OWNER Forging LEADERS { b y R y a n C o n n } 32 MARCH 2025 | INTHEVUE.COM
