How do I separate personal and business expenses as a realtor?
The foundational step is opening a dedicated business bank account and credit card. Every commission gets deposited to the business account. Every business expense gets paid from the business card. This creates a clear paper trail without any sorting required. If a transaction is on your business card, it’s business. If it’s on your personal card, it’s personal.
The tricky part for realtors is mixed-use expenses. Your car takes you to showings and also to the grocery store. Your phone handles client calls and personal texts. Your home might include office space. These need systems to track the business portion accurately.
Vehicle expenses matter most for real estate agents. Track every business mile using an app or a simple log. Trips to showings, inspections, open houses, the title company, and client meetings all count. Personal errands don’t. At year end, you can use the standard mileage rate or actual expenses, whichever saves more. Without a mileage log, you lose this deduction entirely if audited.
Marketing is straightforward when paid from your business account. Photography, staging, signage, postcards, online ads, your website. These are clearly business. If you occasionally pay from a personal card, record it as a business expense with an owner contribution on the other side. Proper real estate bookkeeping keeps these categorized correctly so nothing gets missed at tax time.
Client entertainment and meals require documentation beyond just the receipt. Note who you met with and the business purpose. Coffee with a potential seller discussing their listing strategy is business. Dinner with friends who happen to own a house is not.
MLS fees, lockbox rentals, association dues, E&O insurance, continuing education, and licensing renewals are all business expenses. Pay from your business account and categorize properly.
Home office works only if you have a dedicated space used exclusively for business. A room where you do paperwork and nothing else qualifies. A kitchen table where you sometimes answer emails does not. The simplified method gives you $5 per square foot up to 300 square feet.
Phone and internet can be partially deducted based on business use percentage. Estimate the split honestly and stick with it consistently. If you’re audited, you need to be able to explain your calculation.
The real solution is discipline. Pick a day each week to review transactions and categorize them. Waiting until April to sort through twelve months of mixed expenses is how realtors lose deductions and end up overpaying on taxes. A small business accountant in the San Gabriel Valley can help you set up the right systems and keep your books organized throughout the year.
LA's Small Business Bookkeeper
The Next Step:
A Short Conversation
Tell us about your business and what you're dealing with. We'll listen, ask a few questions, and give you a clear price for the work.
More Questions
How often should I reconcile my business bank accounts?
Reconcile at least once a month, though weekly is better for most businesses. Weekly reconciliation takes less time per session and catches errors while you still remember what happened.
Read answerWhat bookkeeping records do mental health practices need to maintain?
Mental health practices need to track income by payment source, maintain insurance billing reconciliation records, document all deductible expenses, and keep bank and credit card statements organized for tax preparation.
Read answerHow do I track accounts receivable and follow up on late payments?
Use an aging report to see all outstanding invoices grouped by how long they've been unpaid. Build a consistent follow-up schedule with reminders before due dates and escalating contact as invoices age. The key is having a system and sticking to it.
Read answerCan I import my existing data into a new QuickBooks account?
Yes, QuickBooks allows data imports from various sources. You can bring in customer lists, vendor lists, chart of accounts, and historical transactions. The process and limitations depend on where your data is coming from.
Read answerWhat overhead benchmarks should my dental practice be tracking?
Track staff costs (25-30% of collections), facility (5-7%), supplies (5-8%), and lab fees (varies by service mix). Total overhead should land between 55-65% for a healthy practice, leaving room for owner compensation and profit.
Read answerHow do I set up sales tax tracking in QuickBooks?
Turn on sales tax in QuickBooks settings, configure your products as taxable or exempt, and enable automatic rate calculation based on customer location. California has complex local rates, so using QuickBooks' automated feature helps avoid manual errors.
Read answer