Real Estate Industry ~ Tailored Financial Management & Accounting Solutions!

Beyond tracking for taxes ~ Understand your business! In order to get the most out of your financial tracking and reporting, you will need to set up your company's chart of accounts, classes, and client projects to ensure that not only can you satisfy tax filing requirements, but also that your reporting is robust and flexible enough to provide important information about your productivity and profitability. It is this foundation that will help you maximize profits and prioritize your time and activities, facilitating continuous growth. The structure of your accounting system can also drive improved customer service and responsiveness to your clients needs. 

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It's important to understand the rules around how much and when to enter your income (revenue) from commissions and other sources, such as referral fees received, incentives from your broker, or even bonuses offered by a seller. You may also have other sources of income that need to be tracked separately from monies paid to you through your broker.

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You'll have a variety of general expenses, aka overhead, that are simply a cost of doing business such as marketing, office supplies, office space, lockbox purchases, board membership fees and annual dues, licensing, etc. that need to be tracked and classified appropriately as overhead expenses. You will also have client-specific expenses to track regardless of whether or not you ever get a deal closed with them - these are costs associated with providing services to that client alone - with Buyers and Sellers typically having different types of expenses. Examples of client-specific expenses are advertising, open houses, mileage, photography & multi-media, and lockbox rentals. Some expenses can be either overhead or client-specific, and it's important to know the difference for proper classification (again, making your reporting more robust). Additionally, you'll want to understand what types of expenses are legitimate business write-offs for your real estate business and the implications of filing non-eligible expenses if you are ever audited.

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The importance of keeping business-related receipts cannot be understated! Any expense that you record in your accounting software ends up being reported on your tax return, thus reducing your net income on which you are assessed taxes payable. The CRA requires that you keep your receipts and other documentation for a period of 6 years following the year your return is filed, not for the year you are filing for. i.e. Tax returns for 2023 were due in 2024 - the year of filing - so you must keep your business records until 2030, 6 years after 2024. However, if you didn't file your 2020 return until 2024, you are also required to keep those receipts until 2030.

Don't be that agent that hands a few shoeboxes of receipts over to your very expensive accountant at the end of the year to "do with it what they will". Today's technology and cloud accounting solutions allow you to take a snapshot of your receipt and submit it directly to your accounting system, or forward an email invoice or receipt to a unique email address for your business, thus keeping a digital copy of all of your expenses on file in case of an audit by the CRA. 

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Many real estate agents and self-employed individuals frequently ignore regular financial management and reporting and wait until the end of the year to assess how well or how poorly they "performed" in the past year. You want to be a good business manager and continuously have forward and upward motion in your success. This requires regular review of your Financial Statements, Cash Flow, and specific reports that support your decision-making process in all aspects of your business. In order to regularly review these reports and statements in real time it's necessary to stay on top of your bookkeeping and record your transactions with a properly set up foundation designed to give you the information that will be most relevant and helpful to you. 

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Federal Goods and Services Tax (GST) and British Columbia's Provincial Sales Tax (PST) will invariably fit somewhere into your business, regardless of your industry. Your bookkeeper needs to have a crystal clear understanding of how the rules and legislation specifically apply to your business, and stay on top of any changes to the rules.