As a self-employment real estate agent (aka entrepreneur,) you have to track your finances carefully. Unlike W-2 employees, you are responsible for much more financial management throughout the year and especially come tax season. Developing the skills needed to be financially healthy takes discipline, and once they’re mastered, you will make more money, reduce stress, and you’ll save hours managing day-to-day operations. But most importantly, you’ll understand how to grow your business and become a better entrepreneur.
Here are three must-have skills:
1. Understand your current and potential income
The only way to understand your financial health as a real estate agent is to understand your current and potential income. Here’s why…
- You are paid 100% through commissions
- You have quarterly tax payments
- You have to track all your expenses and miles
If you do not track your active deals, expenses, income, and quarterly tax estimates, you will never truly understand how much money you are making now or in the future. We recommend using a tool like Symba that brings all these data points together in one place.
2. Manage your business expenses
Managing business expenses is just as important of a skill as managing your income. If you don’t know how much it costs to operate your business, you could be losing more money than you realize which will significantly decrease your take-home pay.
Many agents neglect understanding where their money is going. Understanding where your expenses are is a great way to budget and plan where to invest your money for growth. It’s also necessary come tax time in order to maximize your business deductions. Once you understand your expenses, you can create a profit and loss statement and estimate your tax liability.
3. Understand tax deductions
Understand your Taxes & Deductions
Once you have an understanding of your expenses, you need to understand how they play into tax management. Your tax deductions, income, and expenses determine your holistic taxes that you must pay, either quarterly or yearly, to the government. Without tracking these deductions, you won’t know how much money you will take home. Unfortunately, tracking these deductions is very hard and can be very time consuming if done manually. Luckily, Symba does this work for you. We will track your income, expenses, and deductions automatically. We will also create your P&L and quarterly/yearly tax estimates. At the end of day, Symba will tell you how much money you make and will help you make more money.