Real Estate Professionals
Commission income is lumpy and deductions are substantial. Property managers need trust accounting that keeps owner funds separate.
The Industry
Real estate agents live with wildly variable income. You might close three deals in March and nothing in April. That lumpy cash flow makes budgeting difficult and quarterly tax payments feel like guesswork. Most agents are 1099 contractors, which means nobody withholds taxes from your commission checks. The money hits your account looking like a windfall until you realize 30-40% belongs to the IRS and Massachusetts.
Property management companies face different challenges. You’re holding other people’s money. Security deposits, rent payments, and owner reserves all need tracking that keeps them separate from your operating funds. Trust accounting in Massachusetts isn’t optional. Title companies deal with escrow funds and strict reconciliation requirements. These businesses look straightforward until you see the compliance obligations that come with handling client funds.
Who This Covers
Who This Covers
Real estate agents, brokers, teams with transaction coordinators or buyer agents, property management companies, and title companies throughout the Merrimack Valley and Greater Boston. Anyone earning commission income or managing funds on behalf of property owners and buyers.
What Complicates It
What Complicates It
Commission income arrives in chunks and gets split with brokerages or team members. Expenses are substantial but scattered across personal cards and accounts. Property managers must maintain trust fund separation. Self-employment tax adds 15.3% on top of income tax. Multiple properties or listings require tracking at the individual level.
What We Handle
Commission income gets tracked properly including splits with your brokerage and any payments to team members. Expenses are categorized to capture every deduction you’re entitled to. MLS dues, continuing education, marketing costs, vehicle mileage, home office, professional photography, staging costs, and client gifts all reduce your tax liability when recorded correctly. Quarterly estimated taxes are calculated based on your actual closings so you’re setting aside the right amount throughout the year.
For property management companies, we set up trust accounting that keeps owner funds completely separate from your management fee income. Rent collected flows into the proper accounts. Security deposits sit in designated trust accounts until disposition. Vendor payments get tracked with W-9s collected upfront so 1099 filing at year end takes minutes instead of days. Owner statements reflect accurate accounting for every property under management.
Commission Tracking and Deductions
Commission Tracking and Deductions
Every closing gets recorded with the gross commission, brokerage split, and your net amount. Expenses are categorized by type so nothing gets missed at tax time. Vehicle mileage logged and home office documented to IRS standards. QuickBooks configured to track profitability by listing or client so you see what activities generate real returns.
Trust Accounting and Owner Statements
Trust Accounting and Owner Statements
Security deposits and owner funds tracked in separate trust accounts per Massachusetts requirements. Management fees recognized as income when earned. Vendor payments organized with proper documentation for each property. Monthly owner statements prepared accurately showing rent collected, expenses paid, and management fees deducted.
What Goes Wrong
Real estate agents stay busy showing homes and negotiating deals. That means receipts pile up, mileage doesn’t get logged, and tax season becomes an archaeological dig through bank statements. You probably left thousands of dollars in deductions on the table last year because the documentation wasn’t there to support them. The IRS allows significant write-offs for real estate professionals, but only if you can prove the expenses actually occurred. A mileage log matters. Receipts for marketing expenses matter. The difference between what you could deduct and what you actually claim can easily be $5,000 to $15,000 per year.
Property managers who mix trust funds with operating accounts create serious problems. Using security deposits to cover a temporary cash shortfall feels harmless in the moment but creates liability exposure that could threaten your license. When a property owner requests an accounting of their funds, you need documentation that supports every dollar in and out. Sloppy trust accounting isn’t just a bookkeeping issue. It’s a legal issue that gets expensive when disputes arise.
Deductions Lost to Poor Tracking
Deductions Lost to Poor Tracking
Vehicle mileage is the biggest one. Agents drive constantly but rarely keep a contemporaneous log. Home office deductions require specific square footage documentation. Marketing expenses paid from personal accounts never get captured. Client entertainment and gifts have limits but get missed entirely when not tracked. These add up to real money left on the table every April.
Trust Fund Exposure
Trust Fund Exposure
Borrowing from security deposits to cover operating shortfalls happens more than it should. Owner disbursements made without proper accounting create confusion about what’s owed. Contractors paid without W-9s on file lead to penalty notices. When property owners question how their money was handled, incomplete records make you look negligent even if nothing improper occurred.
What Changes
You know exactly what you netted on every deal after expenses. Quarterly estimated payments are calculated from actual closings so April doesn’t bring surprises. Your CPA receives organized records instead of a shoebox and a prayer. Deductions are captured systematically throughout the year rather than reconstructed under deadline pressure. The difference shows up in your tax bill and in the hours you don’t spend scrambling before filing deadlines.
Property managers gain confidence that trust accounting is handled correctly. Owner statements are accurate and defensible. Vendor payments are documented with W-9s on file. Year-end 1099 filing becomes routine instead of frantic. When questions arise about how funds were handled, the records tell a clear story. Leticia’s experience managing compliance through multiple audits means the details that matter get tracked from day one.
Financial Clarity Despite Variable Income
Financial Clarity Despite Variable Income
Deal-by-deal tracking shows which activities generate the best return on your time. Cash flow forecasting accounts for the gaps between closings so you can plan for slow seasons. Expense tracking happens in real time rather than reconstructed months later. You make decisions based on actual numbers instead of guessing whether a good month was really profitable.
Compliance Without the Stress
Compliance Without the Stress
Trust accounting procedures keep owner funds separate and properly documented from the start. Expense tracking captures deductions while records are fresh. Tax prep becomes a handoff rather than a crisis. You focus on listings, showings, and growing your business while the financial side stays organized in the background.
The Merrimack Valley's Trusted Accounting Partner
The Next Step:
A 15-Minute Call
Tell us about your business and what you're dealing with. We'll listen, ask a few questions, and give you a straightforward quote.