As A Realtor, tax planning and making astute decisions CAN and WILL save you thousands of dollars. Unfortunately the opposite is also true. I have seen Realtor’s overpay the IRS thousands of dollars each year simply because they believe the following myths.
Myth #1 – I am a Realtor, not a business owner.
This is the single biggest financial mistake a Realtor can make. A successful business owner focuses on maximizing their business’s profits. This is done by implementing strategies to increase income and reduce expenses and of course taxes. Remember, as a Realtor, you work for yourself, i you are not managing your real estate business as a Business Owner, you are losing A LOT of money.
Myth #2 – I only really need to worry about taxes when I am ready to file my tax returns.
Oh boy, this one is a killer. As I tell ALL of my clients, if you are first starting to think about your 2016 taxes when it’s time to file them, you are about to pay the IRS a lot more than you needed to, had you planned. The key to lowering your taxes is to PROACTIVELY plan, not be reactive like many Realtors are.
Myth #3 – Incorporating and managing a corporation’s taxes will cost more than what I will save in taxes.
Yup, I hear this one all of the time. Some Realtors just can’t get out of their own way to help themselves. While opening and managing a corporation is definitely a decision that should be understood, the tax savings for Realtor’s earning $25,000 or more will be significantly greater than the cost of all required tax filings.
Myth #4 – Just because I have a corporation doesn’t mean I need to take a salary.
Ok, this is a BIG mistake and one that can cost you A LOT of money. The IRS requires corporation owners who work to take a “reasonable” salary. While it is true that S-Corp tax returns have an extremely low audit rate, the IRS can reclassify a corporations profits to salary WITHOUT auditing the tax return. So its very easy to avoid a dreaded and very expensive profit reclassification, TAKE A SALARY, we will help you.
Contact us today and let’s make sure you are taking advantage of every opportunity you have as a Realtor and Business Owner to lower your taxes, and keep more of your income.