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Real Estate Business Tips: Documenting Expenses For Taxes

Real Estate Business Tips: Documenting Business-Related Expenses for Tax Purposes

This is for informational purposes only and should not be considered Tax advice, please consult your CPA for additional information.

Real estate professionals wear many hats.

One important part of being a real estate professional is generating sales and expanding your network to grow leads.

While growing a business, it is important to consider your online brand and how you can build brand equity using a variety of tools and strategies.

Another side of the real estate business is managing the finances.

Realtors often incur a variety of business-related expenses in the course of their careers. Some of these include travel, meals and other expenses related to client relations, etc.

While these business expenses can be deductible on annual tax returns, it is important for real estate professionals to ensure they take proper steps to document them.

There is no reason to attract suspicions of the IRS and the following tips will help real estate professionals and other business individuals who might incur business-related deductions cover all bases to keep things in order.

Keeping all this data is essential. Take a look at this other post we wrote on “How Real Estate Professionals Can Use Big Data

Each time you have a business-related expense, remember to document the following:

1. Date – 

Most often, the date an expense was incurred will be printed on a receipt or credit card slip. If paying cash, you might want to create a receipt or slip of your own as a reminder. Cancelled checks are also a way to track the date of certain expenses.

2. Amount – 

Make sure to document exactly how much was spent. Don’t forget to include tax and tip.

3. Location –  

Keep detailed records of the nature and place each business-related expense took place. It’s easy to forget after some time has passed so this is important information to maintain regularly.

4. Business Purpose – 

In order for an expense to be business-related, it must be incurred for your business.

Create a record of the purpose of each business expense so that you could show exactly why and how the expense was necessary.

This might include information such as that the expense was needed to obtain new business, to encourage existing business relationships, or to market your products and services. If the purpose of a meal was to discuss business dealings, document that as well.

5. Business Relationship –

This has to do with expenses where entertainment or meals are involved. Keep a list of names of the people involved, their occupations and a record of how they are related to your business.

This type of record keeping isn’t complicated, but it does require diligence.

Keeping organized will only help you when it is time to file your taxes or work with an accounting professional.

A few examples of items you can keep to show business expenses include:

– receipts, credit card statements, or cancelled checks

– receipts in conjunction with appointment book/online calendar entries

– appointment book/online calendar entries (for expenses less than $75)

This post, inspired by a previous entry at Inman.com, is not intended to replace the advice of a certified accounting professional.

We just like to share content that will help real estate professionals grow their careers and have more success!

Let us know if you have any questions, we are always here to help.

Big Block Realty is California’s leading 100% commission real estate brokerage. As part of our team, you will keep your entire commission while still enjoying all the perks of working with an industry leader such as Big Block.

A career in real estate allows you to leverage your potential in a way that no other industry or field can. If you’d like to learn more about a career with Big Block Realty, we’d love to hear from you!

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Real Estate Contracts Class by The Lugash Law Center – Don’t Miss This

If you’re in Real Estate you do not want to miss this Real Estate Contracts Event! This is one of our most popular event’s, rsvp today…

RSVP Now: http://www.meetup.com/RealEstateSD/events/97899392/

Spencer Lugash of Lugash Law Center, a Real Estate Attorney and a licensed Real Estate Broker, will be sharing his knowledge of the current laws, market trends, and Real Estate forms from a Broker/Attorney’s perspective in an open forum environment.

decision  Spencer is currently featured on ESPN Radio and served as a legal expert on the 760 KFMB talk radio program The Money Maker’s for over a year. Currently, Spencer remains at the forefront of understanding the current real estate contracts, Buyer/Seller rights, Real Estate Agent protection, and Real Estate law in general.

He will help the group gain an in-depth perspective on Agent liability, buyer/seller disputes, and how to make sure you and your clients are protected throughout all types of transactions.

Just a few things that will be covered at this special event are…

– Everything you need to know about the RPA? (and all the small details that are often overlooked)
– What you NEED to know when writing an offer
– How to protect your clients and yourself
– All required documentation
– What are all those addendum’s & attachments?

There will also be an open Q&A session for all attendees to ask any questions to the panel.

Don’t miss out, Join our group and RSVP Now: http://www.meetup.com/RealEstateSD/events/97899392/

Thanks to our sponsors, this event is FREE to attend.

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