Realtors and Taxes - Keeping Good Tax Records

Education & Training with Bob Jablonsky & Associates

As a Tax Professional, your Tax Professional should be able to provide advice on deductions that are available to Real Estate Agents and Brokers.  However, they don’t know what is going on daily in your business and what deductions you are entitled to.  Unless you are able to properly track their income and deductions, you could end up paying more taxes than are needed, and maybe even worse yet, getting stuck in an audit where you end up substantial amount of additional taxes  PLUS penalties and interest.  That doesn’t even include the chaos and stress in your life, is not a fun position to be in, and one you want to avoid at all costs.


While I’ll cover more complex bookkeeping procedures in the future, today I’m going to cover the basics of what you need to track in your bookkeeping system whether you are using Accounting Software, a spreadsheet or on Paper (I heavily advise against the paper…..).   Following these basic rules will make your Tax Preparer happy and keep your out of trouble.


The Basics of Every Bookkeeping System

Here are 7 basic requirements that should encompass the bookkeeping systems of every business and/or self-employed individual:


  1. Always have a separate bank account for your business! It will make preparing for your tax return much easier, and in the event of an audit of your business, make it less likely that the audit slide into other areas.
  2. You must reconcile your bank account monthly! Otherwise, you may have numbers that are not accurate.
  3. You should maintain a receipts journal. The receipts journal should be reconciled against form 1099’s received and should identify Income vs. Non-Income Deposits.  Make sure you don’t report a deposit from a transfer as Income in error.
  4. You should also maintain a cash disbursements journal that will categorize all disbursements by type so you are able to capture all deductible expenses. Every legal deduction saves you tax dollars!
  5. Your Profit and Loss reports should always categorize accounts in a way that is meaningful for tax reporting but also, categorize accounts in a way that helps you to run your business profitably. More on that in a future article.
  6. Calculate and Track Estimated Tax Payments
  7. Are you required to report Payroll quarterly or issue W-2’s and/or 1099’s annually? You need to know the rules.


Need a Tax Professional to Team up With?

If you are a Realtor, or other Small Business owner, who needs professional help with your taxes, keeping your books properly, or dealing with any IRS issues, give me a call at (972) 821-1991 or send me an email at  Learn more about us at

Comments (1)

Kristin Johnston - REALTOR®
RE/MAX Realty Center 262-567-2455 - Waukesha, WI
Giving Back With Each Home Sold!

Great information.  Thanks for sharing and make it a great day!

Jun 07, 2021 07:04 AM