Money Management Tips for Realtors
I support Realtors in their businesses every day - and while I can do some things for them (to help accelerate their cash flow), Try any or all of these 9 tips and you will see your bank account grow:
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Segregate your business activities from your personal ones
- Have separate business bank accounts and keep business and personal expenses separate
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Reserve money for taxes
- Set aside 30—40% of your commissions for self-employment and income taxes and pay the IRS quarterly to avoid tax penalties
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Take advantage of bulk purchasing opportunities
- Oftentimes, pre-paying for advertising, photography, or buying marketing materials in bulk can save you money and allow you to do more (or just keep more of your income)
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Keep a reserve to even out the ups and downs of your commission income
- The NAR recommends building a reserve of 6 months of commissions
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Use credit cards - but pay them off when the bill is due
- By using credit, you provide your business with cash flow flexibility and build your business credit at the same time
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Consider organizing your business as an S corporation
- As an S corporation, you pay yourself a salary instead of paying self-employment taxes on all of your income. Potentially, this could save you thousands of dollars in taxes.
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Make a budget for your business
- By having a plan for expenses, you can better manage your cash flow and execute on your business plan for the year
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Open a SEP IRA
- Saving for retirement is important, and a SEP IRA reduces your taxable income dollar for dollar
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Open an Health Savings Account to pay medical expenses
- With high deductible health insurance plans, your out-of-pocket expenses can be high—so pay for those expenses with pre-tax dollars saved through an HSA
Be sure to consult with your tax and financial advisors to determine how these decisions might fit with your business and personal financial plans. It is never too late to save money!
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