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Track Every Dime/Users/adamp/Desktop/FEB images/TechAndYou

Karen Lehmann came into the real estate industry with a good idea of what it takes to run a business, including the often-dreaded financial management aspect of being a small business owner. That’s because this sales associate with Keller Williams Realty Gulfview in Englewood got licensed in 2003 after running a successful concrete business with her husband for six years, and serving as landlord for several properties.

Rather than shooting from the hip when it came to finances, Lehmann purchased the most recent version of QuickBooks before she even started prospecting. Currently using the 2005 version of QuickBooks Pro, she updates the software with income and accounts payable information twice a week, and says that keeping the system up to date allows her to get instant snapshots of how she’s doing both year-to-date and year-over-year. She can print reports within just a few minutes and says tax time is virtually painless as a result.

Lehmann, who can segment her real estate business, concrete contracting services and properties as different “companies” within QuickBooks, tracks all expenses and income on the software. To learn how to use the software Lehmann took a night course at a local technology school in 1997, but says that today’s comprehensive tutorials (available on the software itself and online) should make the learning curve much shorter.
Here are four key functions that Lehmann uses QuickBooks for:

1. Track Accounts Payable
When bills come across Lehmann’s desk they aren’t shoved in drawers or files for future reference. Instead, she immediately enters them into QuickBooks by due date and “flags” the invoices so that the software can alert her when it’s time to pay them. “As soon as I open up the program I can see what bills are due and when they need to be paid,” says Lehmann. 

To pay the bills, Lehmann uses blank checks that are designed for use on a laser printer. She pushes the “print checks” button, retrieves and signs the legal documents and puts them in envelopes for mailing. The check amounts are deducted from her bank account by QuickBooks, which in turn reports back to Lehmann with an accurate account balance.

2. Track Accounts Receivable
Using the cash basis of accounting (as most small, service businesses would), Lehmann uses QuickBooks to track her commission checks as they come in (not as she earns them). “I don’t like to count my chickens before they hatch,” she quips, “so I take my check and input it as a deposit.” The other option, she adds, is to create an invoice for the amount due, and then mark it as paid when the check comes in.

The advantage to Lehmann’s method is that it requires only a single entry in QuickBooks, whereas the invoicing method takes two different entries to be tracked properly. “Once I get a check in my hands I can just deposit it into my checking account and automatically mark that accounts receivable as paid,” says Lehmann.

3. Analyze Business Expenses
Some business owners prefer a “seat of the pants” approach to finances. Not Lehmann, who enjoys being able to print out any number of reports at any given time. In QuickBooks she specifies which report she’d like to print out (such as year-to-date sales, year-over-year comparisons or profit-and-loss statements) from a large variety.

One particularly useful report for real estate professionals, says Lehmann, is the “per job” statement, which allows her to see just how much money she’s made on a specific sale. She can allocate open house and advertising expenses to specific jobs, for example, and not only figure out her profit, but also get a handle on which marketing efforts are working (and which are not).

Lehmann also analyzes the basic costs of doing business, adding up expenses like telephone, Internet and utilities to create a balance sheet that she can use to assess her business’ financial status. Finally, she also inputs her capital assets (such as computers and her automobile) into the QuickBooks program, which—at tax time—provides depreciation rates and other useful information at the simple push of a button. 

4. Create a Disk for Taxes 
When tax time rolls around, Lehmann serves as a model client for her accountant, who doesn’t have to dig through shoeboxes or reams of paper when preparing this real estate professional’s tax return. She simply selects the “create accountant copy” option on the main screen of the QuickBooks program, pops a CD into her computer and sits back while an entire year’s worth of data is written onto the portable media.

“It contains all of my entries and my profit-and-loss statement and balance sheet,” says Lehmann, who typically heads to her accountant’s office in early January to deliver the CD. “He doesn’t have to go through my receipts, and doesn’t charge me as much to do my taxes.”

Knowing that her use of technology gives her an edge when tracking finances, Lehmann says now is a good time for other real estate professionals to follow her lead and start using a similar system to get on track. “In these times, every penny has to be accounted for,” says Lehmann. “A good financial software package gives you a good idea of what is and what isn’t paying off, and helps you adjust your expenses to focus on those efforts that are actually making you money.” 

This column, designed to offer examples of how salespeople and brokers are using technology in their offices, won first place in the 2006 Best Column category from the Florida Magazine Association. The column is for general information only. Opinions expressed here don’t necessarily reflect an endorsement of the views by Florida Realtor® magazine or the Florida Association of Realtors® (FAR).