who buys things that they do not use . 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
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It ’ s really simple : get separate debit and credit cards for your businesses . And if you are not in a position to do so , then dedicate one debit or credit card to business transactions for easy accounting . Doing so helps you build creditworthiness not just on a personal level , but on a business level as well .
3 . Poor Record Keeping
Are you one of those people who assume that when the time comes to do your taxes you will remember it all ? How is that working out for you ? Poor record keeping is a serious issue for some real estate investors . You may fail to keep receipts of the building or renovation materials that you use . You may also fail to keep a record of your debts or payments to freelance professionals that you hire . Categorizing employees or expenses wrongly may also be an issue . Regardless of what the problem is , poor record keeping will come back to haunt you in the very near future – when the taxes come calling .
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 .
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
Are you setting very little money for taxes ? That ’ s probably the reason you get penalized often .
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 !
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