By Maddie Jostol
As an independent contractor, you’re running your own business – and you experience all of the perks and challenges that come with that. Tax season isn’t fun for anyone, but it’s particularly frustrating as a 1099 independent contractor.
We all experience the same thing year over year. Tax season arrives, and it’s all you can do to pull everything together to file, let alone do it in a way that will save you money. You work through the endless forms, attempting to find all of the information you need. You get to the part where you need to fill in your Schedule C deductions… and… nothing. Another year went by and you don’t have the necessary documentation to deduct most of your business expenses. “Oh well” you think to yourself, “it’s not worth the time anyway.”
Here’s the deal: real estate agents are losing serious cash by neglecting to take advantage of available deductions.
The truth is, it’s incredibly time consuming to track your expenses, mileage, and deductions all year-round. And guess what? It isn’t as difficult as it sounds if you start early in the year. Below are a few things you can do to help yourself survive tax season as an independent contractor.
1. Know what deductions you should be looking out for.
The first step is knowing what deductions are available to you – and there are more than you might think. Things like your home office or software subscriptions are deductible expenses that you shouldn’t let slip through the cracks. Know what you should be looking out for, so you can get a system in place to track them year-round.
For a comprehensive list of deductions and information about each, click here to download our Guide to Stress-Free Taxes for Agents.
2. Track your expenses as they happen.
Receipts are every independent contractor’s worst enemy. Paper or digital, they’re a pain to keep track of and they’re difficult to organize when it comes time to file those taxes.
Consider a simple personal accounting system like QuickBooks Self-Employed. This app lets you snap a pic of a receipt from directly within the app and it automatically categorizes and stores that receipt. It then matches the receipt with the expense when it comes through as a bank charge. When it comes time to file, all of those business expenses have been tracked, categorized for your Schedule C, and documented appropriately. You can officially say goodbye to that mismanaged shoebox of receipts.
Mileage tracking is one you definitely won’t want to miss. You’re always on the go. Some days it feels like you live in your car – you’re running errands before an open house, picking up signage, meeting with clients, and having coffee with prospective clients.
When you have the QuickBooks Self-Employed app, it tracks your mileage every time you get in your car (seriously!). You can then go into your app, view your recent trips, and swipe left or swipe right to designate those trips as business or personal. Yes, it can be that easy (we didn’t believe it until we tried it either). Easier than a dating app, even.
3. Don’t do it alone.
Get a reliable system in place. As much as we’d like to do it all ourselves, the reality is it takes time and energy that we’d rather put into closing sales. At the same time, there are thousands of dollars to be saved by efficiently managing your business finances. When you get technology on your side, it takes away the weight and frustration of accounting and tax filing.
The best part of this is that you don’t need a complex, expensive system, you just need one that is designed for 1099 independent contractors. That’s the key. Use an accounting system that fits your unique needs as a realtor and helps you run your business more smoothly.
Want to give QuickBooks Self-Employed a try? We’re offering 50% off your first 12 months (that makes it just $5/month!). Click here to try it out!
By Tiana Baur
There are some simple, yet essential ways to make sure your business is as profitable and thriving as it can be. These ten tips will hopefully serve as a check list for when tax season comes around, as well as the rest of the year in order to prepare and set your business up for the brightest possible future.
1. Remember to file quarterly taxes
This may seem obvious to most, but even though you know you need to do it, you don’t always remember to. Life gets busy. Filing quarterly taxes means avoiding penalties and additional interest owed. Not doing so can also raise a red flag with the IRS and hurt your business in the long run.
2. Home office deduction
Make sure you deduct for a home office, but make sure you don’t over exaggerate the size of the space. There’s a fine line with this one. Let’s say your home office is 250 square feet
of a 2,500-square foot home, the percentage of the deduction you can take is 10 percent. Remember you can only do this if you aren’t already deducting your office space at your brokerage’s office. Whatever you do, make sure you choose one to deduct so you don’t miss out on hard earned cash.
3. Mileage reporting
Don’t. Be. Sloppy. If you only remember to track miles on some days, you’re missing out. Tracking all your miles is the key to tax saving success. QuickBooks Self-Employed app auto tracks the mileage, so you don’t have to worry about remembering. With this program, you can deduct an average of over $7,000 dollars a year. Capture everything you need automatically, then categorize mileage with the click of a button.
4. Deduct your big purchases
Buying a laptop, phone, printer, furniture or anything else related to your business? Deduct! These big ones might get forgotten if you purchased them in the first two quarters of the year.
5. Coffee, lunches, dinners, cocktail hours
If you’re constantly taking your clients out for a bite or a coffee, make sure you keep your receipts. Scratch that. Snap a photo in your QuickBooks Self-Employed app. No more leaving receipts in boxes or in the glove box of your car. No more! Doing this correctly means saving agents an average of over $4,000 a year.
6. Avoid an audit
The more money you make, the more likely you’ll be audited. If your income is creeping up, it’s time to use a little extra paper to employ better tracking of receipts, donations to charitable causes, and mileage. Maybe also time to consider hiring a professional to keep an eye on your records, rather than trying to keep track of it all yourself. Maybe.
7. Deduct software
This one might surprise you. You can fully deduct any software needed to run your business, including accounting and lead generation software. QuickBooks Self-Employed for example, which automatically tracks your expenses and mileage, can be fully deducted. Win-win.
8. Further education
Lots of states require continued education to keep a real estate license, while in others, it’s not only required, but crucial to stay competitive. You are probably able to deduct registration costs, transportation, and accommodation costs for coaching, courses, etc. This goes for in-person and online courses.
9. Desk fees
Your desk fees are deductible regardless of your brokerage. With QuickBooks Self-Employed you can set a rule to automatically categorize this expense whenever you pay that desk fee. Keep in mind, you can only do this if you aren’t doing the home office deduction.
If you’re travelling to a conference, having QuickBooks Self-Employed makes life way easier. It allows agents to focus on networking and the purpose of their trip, by linking their bank account to the app. As soon as agents incur any expense associated with travel, all they do is tap a button to categorize it in one of the IRS approved categories.
Get started with QuickBooks Self-Employed today and start running a more profitable, professional business.
By Tiana Baur
Every single tax deduction you are or are not allowed to take is impossible to know without a helping hand. If you aren’t utilizing an accounting or tax management system, it means you’re losing a lot of money. And by a lot we mean thousands of dollars that could be in your pocket instead. Avoid overpaying on your quarterly and year end taxes with these tips:
1. Mileage – over $7,000 in deductions
You drive a lot, spending your days driving between properties, appointments and shuttling your clients. Sometimes you probably feel like a glorified Uber driver. How do you determine whether to go with the standard mileage deduction or track all your auto-related expenses?
For those who drive more than 10,000 miles per year, the IRS requires you to keep a detailed log in order to claim this deduction. It needs to include date, time, mileage and purpose of the trip. Do you use an app to track all of this? Even if the answer is yes, there’s a better app out there. QuickBooks Self-Employed is a tool that helps users track an average of $7,393 in mileage deductions per year. It automatically captures everything you need with the click of a button.
2. Meals and fun – save over $4,000 a year
You can deduct meals as a business expense in two forms: 1.) When you are travelling on business and 2.) When you are dining with clients or with other professionals for the purpose of conducting business or generating referral business. With these, you’re allowed to deduct 50 percent of your total expense, which includes tax plus tip for the meal.
Many agents save receipts in boxes and haphazardly enter them into spreadsheets or give them to an accountant later, but this leads to loss of money. QBSE streamlines this process. Simply snap a photo of your receipt with your QBSE smartphone app to digitally store it with your transactions. This process helps users save an average of $4,340 per year.
3. Marketing and ad spend
Online and social media advertising costs are quickly becoming a big part of agent spend. Agents are expected to do more for their listings than they ever have before and they need the tools to effectively do it. Did you know that production costs like writing and design fees are also deductible? This includes website design and hosting fees, search engine marketing, pay per click advertising, video production, and any other IT-related costs.
4. Home office or space
Do you have a home office or a dedicated space to work? If you do, you’re eligible for a home office deduction, even if you also have office space at your broker’s office — unless you’re deducting desk fees already.
5. Desk Fees
Your desk fees are deductible regardless of your brokerage. With QBSE, whenever you pay that desk fee, you can set a rule to automatically categorize this expense. This however is only an option if you aren’t already doing the home office deduction.
6. Big purchases
Stationary, photocopies, and any other consumables needed to run your business are deductible. The ones you need to make sure you deduct are the big ones: laptops, phones, furniture, copiers, etc.
7. Fees, Licenses, etc.
Annual fees are common costs of doing business and are deductible. In real estate, that means your state license renewal, professional memberships, and MLS dues. Also, you can deduct real estate taxes necessary for your business, but not self-employment taxes.
8. Education and travel
Given rapid industry change, continuing education is imperative. It’s also a requirement in most states. If you need to travel to attend an event or meet with a coach, make sure to track all the information correctly to ensure that you’re compliant with the IRS. One way to do that is by linking your banking accounts with QBSE. As soon as you incur an expense associated with travel, tap a button to categorize it in one of the IRS approved categories.
9. Tools and services
Any software needed to run your business is fully deductible, including subscription services. Products such as QuickBooks Self-Employed not only help you automatically track your expenses and mileage, but may be fully deducted as well.