Consider why you decided to work for yourself as a realtor. Maybe you wanted more freedom or flexibility, but you weren’t prepared for the responsibilities of self-employment, like tax planning.
Fortunately, planning for taxes doesn’t have to be as scary as it seems. As long as you have a good plan, you can enjoy a few benefits come tax time.
Read on to learn how tax planning can benefit you and your career.
One of the reasons why tax planning matters for realtors is that it can save you time. While it will take time to plan for taxes now, you can save time near the tax filing deadline.
You won’t have to rush to pay your taxes on time, which could cause you to make mistakes. Instead, you can take your time as you go over all of your financial documents.
Tax planning can also help you find help with your taxes if you need it. If you don’t have an accountant you already work with, you can start your search long before tax season when accountants get busy.
Tax planning for a small business can also help your business lower its tax liability. You can find different ways to save, such as by deducting expenses you may not have expected to deduct.
Even hiring tax planning services can help you save money, even though that sounds counterintuitive. In most cases, you can deduct the cost you spend on a tax professional.
The professional can help you prepare your tax and plan for when you need to pay them. That way, you can avoid missing deadlines and owing penalties or other fines.
As a realtor, you have a lot on your plate, from finding clients to helping close a sale on someone’s home. Your work can be stressful, and you may not want to deal with taxes and the extra stress from that.
However, tax planning can help you keep your stress levels low. By planning for taxes early, you’ll know that you have the situation under control, so you can focus on serving your clients.
When tax time comes around, you will have everything organized and ready to go. Then, all you have to do is file your taxes, so you won’t have to rush to complete the entire process.
Help Plan for Purchases
Your tax planning strategies should include a plan for business purchases. As you plan for taxes, you may realize that you’ll owe more than you expect, and you might want to bring that number down.
Fortunately, tax planning allows you to prepare for bigger and smaller business expenses. If you have an idea of how much money you’ll have to pay in taxes, you can decide to buy new equipment.
Maybe you need to upgrade your business computer anyway, so you buy a new desktop. When you plan ahead for taxes, you can buy the desktop at the right time to help lower your tax liability.
Keep From Missing Tax Deductions
Tax planning strategies can also help you avoid missing major tax deductions that you qualify for. If you rush to do your taxes at the last minute, you may do the bare minimum to submit documents on time.
However, that means you may end up overpaying your taxes. Perhaps you spent a good amount of money on reasonable business expenses, so you deserve to save money there.
Planning for taxes ahead of time allows you to learn about potential deductions. You can even decide to buy more items to help grow the business, and you can lower your tax bill at the same time.
Then, you can make sure to take those deductions when you file your tax return.
Prepare for Your Retirement
Financial planning can also help you set up a retirement plan. As a realtor, you may want to set up a traditional IRA, so you can deduct the contributions from your taxable income.
Then, you’ll be able to save money on your tax bill, even if you don’t have more business expenses. You can contribute a certain amount of money each year, and you won’t have to pay taxes until you retire and withdraw the money.
Another option is to set up a Roth IRA, but you do have to pay taxes on what you contribute. However, that can be a good option for realtors with other business deductions or who don’t make a ton of money and want to pay taxes now instead of later.
Choose the Right Health Insurance
Another benefit of tax planning as a realtor is that you can choose the best health insurance plan. Self-employed people, including realtors, are responsible for obtaining health insurance.
However, you can deduct the cost of your premiums, so you may want to choose a plan with a higher premium. Alternatively, you can choose a plan with a low premium and a high deductible.
Then, you may qualify to open and contribute to a health savings account (HSA). HSA contributions are tax-deductible, so you can max out your account to save on taxes even more.
Decide When or Who to Hire
Tax planning can also help you figure out when to hire help and who to hire. If you need an assistant, for example, you may want to hire a spouse or child.
Then, you’ll be able to deduct the amount you pay your family member on your taxes. That can be an excellent way to save on taxes and get the help you need to grow your business.
Of course, hiring anyone can also help lower your tax liability. Be sure to talk to a professional about tax breaks for hiring employees. That way, you can know when to hire people to help you.
Start Tax Planning Now
If you’re a realtor, you may think it’s easy to pay your quarterly taxes and file at the end of the year. However, tax planning can help you make the most of your expenses and lower your tax bill.
Many of these things are legal, so you don’t have to cheat the system. But you do need a good tax planning strategy to lower your stress.
Do you need help planning for taxes? Learn about our tax planning services and contact us to get started.