The first thing to do is write down everything you spend in the way of business transactions. Use a business credit or debit card to pay off your expenses because it makes everything much easier to track. Be sure to ask for a receipt always. Then make sure that you have categorized your business transactions and employeerelated expenses correctly. In addition, keep a very close eye on what is coming in and going out of your business accounts. Be sure to keep a record of your business activities going back a few years, just in case.
It may seem like a nuisance to keep good records, but when you need to account for your money to IRS or potential business buyers, you will thank yourself for doing so. Not only will you be able to stay out of trouble, but you will also be able to stay on top of reimbursable expenses that will help keep more money in your pocket.
What’ s the point?
Those receipts and statements you keep should be used to reconcile your credit and bank accounts. It is the only way for you to get a clear picture of your real estate business in terms of what you owe and how much you really own as equity and cash.
So take time every week or month to balance the books. Don’ t procrastinate until it is too late to save your business.
5. Setting Little Money Aside For Taxes And Other Bills
taxes?
Are you setting very little money for
That’ s probably the reason you get penalized often.
Image from Canva Pro
Image from Canva Pro
It may seem like a nuisance to keep good records, but when you need to account for your money to IRS or potential business buyers, you will thank yourself for doing so.
How about a steady cash flow: are you always short of cash to run your business?
If you run a real estate business, then you are selfemployed. That means that you are responsible for setting aside enough money aside to pay your taxes and any other financial emergencies that crop up. We are talking about Social Security, Medicare, and retirement savings for the future.
Your poor cash flow on the other hand, could be attributed to poor accounting or the fact that you are overextending yourself financially. If you are spending most of your business revenues on expanding your business without keeping a financial emergency fund for the business, then between your regular business expenses and debts, you will have little money for emergencies – hence the poor cash flow.
So take stock of your finances, and leverage debt to help you expand that real estate business without compromising your ability to pay taxes or keep the business in operation.
Cash is still king.
4. Not Reconciling Your Bank And Credit Accounts
If you have a good record of your business transactions but do not reconcile your bank and credit accounts, then there is no difference between you and hoarders who buys things that they do not use.
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