Is Tax Filing and Compliance Weighing Down Your Real Estate Business?

As a real estate agent, your primary focus should be on your clients’ needs. Often, administrative burdens quickly pile up and sway you away from what you are strongest in… closing deals.

To help you do that, here are some helpful tips that successful real estate agents apply in their day-to-day business operations for tax filing and compliance:

IDENTIFYING YOUR TAX FILING REQUIREMENTS AND DEADLINES

As a real estate agent in Quebec, other than filing a personal income tax return every year, you may have to file a corporate tax return if you have an incorporated business, or a holding company. You also may have sales tax remittances to be filed (monthly, quarterly, or annually), payroll deductions at source for any employees, T4A slips for commissioned workers, T4/RL-1 Slips/Summaries for employees, T5/RL-3 Slips/Summaries for any dividend declarations (from a corporation), CNESST declarations, just to name a few…

If you are confused with all of these tax filing requirements, it is always best to seek advice from a reputable professional who can help you identify what needs to be filed, and by when, so that you can avoid late filing penalties and potentially interest charges on amounts past due.

KNOWING WHAT YOU CAN AND CANNOT CLAIM AS PART OF YOUR REAL ESTATE PRACTICE

It may be fairly simple to identify what is considered business income as a real estate agent. Eligible business expenses, on the other hand, are a little less evident to identify. Certain expenses are partly allowable as a deduction for income tax purposes… potentially similarly treated (with restrictions) when claiming credits on your sales tax remittances.

You therefore need to be careful with what you include in your chart of accounts. What may seem simple, might lead you into error and create costly mistakes down the road. It is always better to get tax compliance right from the get-go. Consulting with a trusted advisor on what you can claim as eligible business expenses, noting this for future reference is an important investment of your time. Moreover, you may be missing out on some deductions including but not limited to vehicle expenses, home office expenses, meals and entertainment, if you’re not aware that they may be (in part) deductible against your business income.

KEEPING TRACK OF YOUR BUSINESS INCOME AND EXPENSES IN A TIMELY MANNER

After having identified what to keep track of, do it regularly. Don’t procrastinate on keeping your books and records in order. It’s easier to file something away properly, and have it recorded in your books, while it is fresh in your mind, than to wait until the week before a government filing and/or payment may be required.

If you don’t have the time nor energy to waste on the administrative burden of keeping a clean set of records, then don’t shy away from finding the right person who will assist you with just that. The cost of hiring a trusted professional to handle your bookkeeping and tax filing requirements is a deductible business expense. It is also part of doing business as a real estate agent. The time that you can save by not doing something that you didn’t really subscribe to (i.e. accounting) and, instead, focus on what you are passionate about (i.e. closing deals and helping your clients buy and sell properties), as well as your return on closing those extra deals should FAR outweigh the cost of your professional fees for handling this administrative burden on your behalf.

WE ARE HERE TO HELP

If you have questions about tax filing requirements and deadlines or keeping your bookkeeping records clean, please do not hesitate to contact us for a free consultation.

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2021-09-20

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