It's TAX time again! What does that mean for Realtors®? The one thing that changed this year for me was that my tax man finally made me put my expenses in categories. In the past I listed each one line by line (date by date) and I guess he got sick of categorizing for me. LOL.
Another reason to bring this up again... is so the consumer realizes it's not just a paycheck and running to the bank. I put heart and soul into helping my clients sell their home or buy a home and though it is a means of making a living there are the rewards in the end with a job well done. If it were just a paycheck I'd be working a 9-5 job and not have to worry about.......
What is an Independent Contractor?
In a nutshell it means I am self employed. Even though I hang my license as a Realtor-Associate® with Century 21 Liberty Homes, Mililani, Hawaii.....I am my own business and I have responsibilities (paperwork and that dreaded itemizing expenses/deductions and PAYING my own TAXES) that automatically come with being an independent contractor.
- I pay my own quarterly estimated self employment 1) Hawaii State Tax, 2) Federal Tax AND 3) GET (General Excise State Tax).
- I pay my own expenses: postcards, real estate shows burned to cd, flyers, postage, gasoline, supplies, marketing, extra classes, licensing fees, MLS dues, NAR dues, HAR (Hawaii Association of Realtors) dues, HBR (Honolulu Board of Realtors) dues, E & O Insurance, Sentrilock lock System fees and dues, cameras, videos, computer equipment, pc upgrades, software (and that list goes on) client closing gifts and anything and everything that goes with my business down to my whole home office and the added expenses to run my own home office.
I do not get paid by the hour nor am I an 'employee'.
I do not get paid until a transaction closes (records) no matter if I'm representing a buyer or a seller. (In other words everything comes out my pocket and not always does a sale close) By time each brokerage gets their part of the commission, the buyer/seller agents then get their %. (Some think that we get that WHOLE commission) and then I am able to pay bills with that commission check.
I also set aside 30% to pay for my quarterly estimated self employment taxes (Federal/State) and 4.5% for quarterly General Excise State Taxes. I seriously wonder why I am paying more GET now for the Honolulu transit (rail) system when I KNOW I won't be riding around with clients on that rail system as long as I am a Real Estate Agent. lol.
Now. For expenses and deductions and keeping track all year for end of the year taxes?
- I have a yearly excel file with one sheet for commission (income),
- Another sheet for deductions (expenses) including payments for GET tax which is a deduction (scanned receipts to go with) Make sure to ask your professional tax person exactly what you are able to deduct.
- Another sheet listing all my clients and the mileage to and from wherever and the total milege for each as well as total for the year.
- And the last sheet has my auto expenses (gas, insurance, oil changes, maintenance etc.). My two year old car is paid off but there are still expenses and depreciation for my tax man to tally up.
- I have finally got Quicken installed so I can make life easier for me for this next year :)
- When the 1099's and the W-2's come in I am ready to send it off to ....MY TAX MAN!
This info just may help a new agent in the Real Estate Industry realize that it's much more than just closing a transaction.
It's income AND debit.
It's the following up and keeping up with the 'behind the scenes' work and responsibilities that come with running your own business.
It's about running a tight ship along with the professional service, caring and expertise we give our clients.
Note: We received all our W-2's and my 1099's and as of two days ago, our tax man has filed our taxes. I'm glad that's over. Now...to start on this year. :) Yes, I'm on it :)
Note#2: I am also an employee for C21. I help with admin/property management, office support, websites, mls, opening/closing files etc.
Celeste "Sally" Cheeseman is a Realtor-Associate with Century 21 Liberty Homes in Mililani, Hawaii. With a sharp understanding that a listening ear is the key to a client's needs she serves the island of Oahu (Honolulu County) and all Hawaii Military Relocating to Hawaii, Hawaii Retirees, Hawaii Job Transfers and Hawaii Residents. Website: www.hawaiihomesmarket.com
Celeste "Sally" Cheeseman is a Realtor-Associate® and Certified Residential Specialist (CRS) with Century 21 Liberty Homes in Mililani, Hawaii. With a sharp understanding that a listening ear is the key to a client's needs she serves the island of Oahu (Honolulu County) and all Hawaii Military Relocations, Hawaii Retirees, Hawaii Job Transfers and Hawaii Residents, Home Buyers and Sellers.
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