In a nutshell it means I am self employed. Even though I hang my license as a Realtor-Associate® with Century 21 Liberty Homes, Mililani, Hawaii.....I am my own business and I have responsibilities (paperwork and that dreaded itemizing expenses/deductions and PAYING my own TAXES) that automatically come with being an independent contractor.
I pay my own quarterly estimated self employment Hawaii State Tax, Federal Tax, GET (General Excise Tax).
I pay my own expenses: postcards (like the one in the picture that I paid someone to make because I was strapped for time) gasoline, supplies, marketing, extra classes, licensing fees, MLS dues, NAR dues, HAR (Hawaii Association of Realtors) dues, HBR (Honolulu Board of Realtors) dues, E & O Insurance, Sentrilock lock System fees and dues, cameras, videos, computer equipment, upgrades, software (and that list goes on) client closing gifts and anything and everything that goes with my business down to my whole home office and the added expenses to run my own home office.
My listing for a single family home recorded last Friday and the escrow officer drove down to our office not a half hour after she notified me of recordation; to hand deliver the closing docs and commission checks to us. As soon as she left I hopped on the phone and called Mililani Florist to deliver a 'tropical bouquet' to her.She called with an appreciative tone to her thank you. Anyway, these are the expenses I incur for just giving a thoughtful thank you.
I do not get paid until a transaction closes (records) and subsequently I am able to pay bills with that commission check. (like all those expenses I mentioned above) I also set aside 30% to pay for my quarterly estimated self employment taxes and 4.5% for my General Excise Taxes. I seriously wonder why I am paying more GET now for the Honolulu transit (rail) system when I KNOW I won't be riding around with clients on that rail system as long as I am a Realtor-Associate®.
Now. For expenses and deductions and keeping track all year for end of the year taxes?
- I have a yearly excel file with one sheet for commission (income), another for deductions (expenses) including payments for GET tax which is a deduction, and yet another sheet listing all my clients and the mileage to and from wherever and the total milege for each as well as total for the year. And the last sheet has my auto expenses (gas, insurance, oil changes, maintenance etc.).
So, when the 1099's and the W-2 comes in by January 31st I am ready to send it off to ....MY TAX MAN!
- Why do I have a 1099 AND a W-2? I ALSO work for Century 21 Liberty Homes as an employee 2.5 days a week. After so many administration people kept quitting ( and let go) and not knowing what they were doing....my Brokers asked me if I wanted to work for them (with my great skills in admin :) four and a half years ago. I have worked BOTH my career AND my job side by side.
Randy Prothero (fellow agent and Broker Associate at our office...not to mention my buddy) keeps telling me to stop calling myself a part time agent because I am around Real Estate more than most Full Time Agents. I agree. Most of my life is REAL Estate ....even while blogging.
And then I switch to Family mode :) I have a good life as long as I have balance.
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Why did I write this?
Because this info just may help a new agent in the Real Estate Industry realize that it's much more than just closing a transaction.
It's income AND debit.
It's following up and keeping up with the 'behind the scenes' work and responsibilities that come with running your own business.
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