Bookkeeping for real estate agents requires a large number of entries for proper maintenance of records. Put another way, bookkeeping for real estate agents is a complex process that involves huge time consumption. Proper account maintenance is important for real estate agents because it affects their credibility and sometimes it might be needed by Lenders, Shareholders, Government Bodies etc. Keep reading to find out the problems entailed by bookkeeping for real estate agents in detail.
Commissions management:
Since it is true that the commissions of real estate agents are established based on the percentage of the business, their salary is variable. If the real estate company does not plan a fixed amount to account for the fluctuations, the salary is variable. This leads to difficulties in payroll and tax calculation.
Early Payment:
If the brokerage amount is settled early, and there is a change during the final settlement, then the extra brokerage amount needs to be returned, and this will cause a disparity in the accounts, making the calculations difficult. This factor should be considered while maintaining accounts in real estate broker accounting software.
Single bank account:
Generally, real estate agents have only one bank account for both personal and professional purposes. Therefore separation of personal transactions from professional transactions is necessary to find out the exact taxes. This complicates the bookkeeping for real estate agents and it is recommended that different accounts should be maintained for professional and personal purposes.
Lack of maintenance of receipts:
Maintaining receipts of all tasks could be hard for real estate agents, due to the busy nature of their work. Real estate management involves a lot of travel and all these should be recorded. More than that, the entries should be perfect for IRS audits. Maintenance of the expenses makes the bookkeeping services for real estate harder.
Statutory Trust Account:
At times, another person can collect the real estate agent can collect an amount from real transactions on behalf of others and keep it in their account for some time. A separate account needs to be maintained for these purposes. This is called a Statutory Trust Account. This account requires compliance with government rules and proper tax calculation.
Different taxation:
Different types of expenses entail different taxes, therefore different taxes need to be calculated. Non-maintenance of proper details of transactions can lead to improper tax payments. Also, the taxes for independent real estate agents and those employed in a company will vary. The taxation rules are changed by the Government based on circumstances that cause huge variations in market conditions such as Covid-19. Therefore, accounting software used for real estate agents must be competent in including these changes.
Conclusion:
These are the commonly faced difficulties during bookkeeping for real estate agents. Though there are many accounting software, using QuickBooks for real estate agent bookkeeping is a modern solution that offers exact tax calculation. It maintains a perfect backup of data and sends reminders of pending payments.
904bookkeeping offers professional Quickbooks bookkeeping services remote/in-person. 904bookkeeping facilitates easy and accurate bookkeeping for bookkeepers in Jacksonville Florida.
