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Fiscally Fit for Tax Time

Sandra Ciola
At tax time especially, it’s important for a real estate professional to think of himself or herself as a small business. Sandra Ciola, a sales associate with Greater Miami Investments in Coral Gables, says QuickBooks financial software helps her do just that.
She bought the program (2013 QuickBooks Pro is $249.95, upgrade $199.95)—to keep tabs on her personal finances—and has used it in her real estate practice since she became licensed in 2004.

There are several other programs out there, but Ciola, who is also a CPA (certified public accountant) and a mortgage broker, says she prefers QuickBooks because it’s user friendly. “For me, it’s a piece of cake. But you don’t need an extensive accounting background [to use it]. I use it for everything in my life and, of course, all the transactions related to my real estate activity.”
She also handles the bookkeeping for her husband’s companies, and she says QuickBooks (Professional version) helps her have a better grasp on where the couple’s respective businesses are headed from year to year.

Here, Ciola outlines some of the ways that sales associates can benefit from a financial software program:

1. Track Income and Expenses
Long-range financial planning is necessary for all sales associates, says Ciola. “QuickBooks helps you organize your finances and keep track of your income and expenses and determine how the money is used,” she says.

As she incurs expenses, Ciola classifies them according to whether they’re for telephone service, license renewal fees, office supplies, professional dues, advertising, meals and entertainment, and more. Each month, she prints out a report that helps her figure out how much money is coming in vs. how much is going out.

“If I’ve budgeted a certain amount (for advertising, for example) and it’s costing me more, I’ll have to [work on] increasing my revenue or cut that expense,” says Ciola. “Most [sales associates] probably have an idea of how much they’re making [and spending], but with QuickBooks you can keep track of your real expenses and earnings, rather than guess.”

2. Online Banking
One feature that Ciola says she’d find difficult to live without is the program’s online banking tool. It lets her access her accounts, write electronic checks, transfer funds and pay bills 24/7. (To set this up, her bank had to be one of the program’s participating financial institutions.)

She can download transactions directly from her bank into QuickBooks, a feature that lets her skip hours of data entry. To reconcile her account, she simply goes to the program’s Online Banking Center, selects “Get New QuickStatement” and then clicks “Send.” The program automatically downloads all her banking transactions so she can cross-check them.

“Because all your payments go through the computer, you’re not printing or writing checks,” says Ciola. “You don’t have to put things in envelopes, buy stamps or go to the post office, so you’re saving money, and of course, it’s much less time consuming. With this [tool], I can pay my bills in five or 10 minutes. Or, if I have a recurring expense I can set it up so that it’s automatically done for me. It frees me up to do things that bring in money.”

3. Compare Years, Set Goals
“For [sales associates] who want to see in black and white how they’re doing year to year, you can compare the profit and loss for [the most recent years], for example, so it’s going to give you how much (in percentages) your income and expenses increased or decreased,” says Ciola, adding that she can also generate reports that interpret these comparisons.

However, she points out that QuickBooks isn’t a high-end program that lets her create in-depth financial projections or statistics. “You can generate graphics, though, like a pie chart, that shows what percentage of your expenses go to advertisements, seminars and continuing education so you can figure it out at a glance.”

Now that the real estate market has cooled to a certain degree, it’s important for sales associates to keep track of how they’re spending money, says Ciola. “It was a seller’s market but now it’s a buyer’s market, so we need to be careful how we spend money and how [sellers] price our listings.

By looking at your expenses for last year you can figure out how you can better allocate the money you’re making. It’s easy to pay for ads and go to seminars when money is coming in, but [when it isn’t] QuickBooks can help you better figure out where you should spend money.”

Based on a prior year’s activity, Ciola can set up sales goals and a budget for the New Year. “The program will generate a report that helps you budget and compare [your projections] with actual expenses every month to see if you’re reaching your goals. For example, if you project [spending] 5 percent of your income on advertising, you can see if it’s realistic.”

4. Monthly Tax Planning
Ciola doesn’t pay quarterly taxes. But QuickBooks helps her keeps tabs, each month, on how much she’ll owe the IRS come April 15. “My taxes are 80 percent done [by January],” she says, pointing out that she doesn’t base it on what she paid in the previous year. “Most accountants estimate your payments based on the prior year, which is fine. But if you have [an amount] that is more realistically based on your actual profit and loss, you won’t have to pay more because you were short.”