Professional Services

Financial Tips for Insurance Agents

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Keeping accurate and organized finances is one of the most important responsibilities for insurance agents. You need to track your revenue, manage your expenses, and prepare for your tax filing for your business to achieve success.

In this blog post, we’ll provide a few tips that can help insurance agents run a financially-healthy business.

Use cloud software to track your business transactions

It’s crucial to maintain a general ledger that has all your business’s transactions accurately recorded and organized. The good news is this task is much easier with the help of cloud accounting software. It can connect with your online bank account and other cloud solutions and automatically receive all your transactions.  

When you log into your accounting software, all you’ll need to do is confirm your transactions are correct and perform your bank reconciliation. The time you would have spent on data entry can instead be used analyzing your books and various accounting reports so you can make savvy business decisions.

Expense management for insurance businesses

Expenses consist of any money spent or costs incurred through a business’s revenue generating efforts. If your business uses cloud technology, it will be easy to track most your expenses since they’re paid for directly with business funds (and your online bank account is synced with your general ledger). Some examples of common expenses include advertising expenses, administrative fees, business travel, and insurance.

However, some expenses have special rules or circumstances, making them more difficult to track. Here are some examples:

  • Client gifts, meals, and entertainment expenses – When it comes to giving gifts to clients, you can deduct up to $25 per client per year. The cost of client meals or entertainment are 50 percent tax deductible. Properly categorizing these expenses can be difficult for your bookkeeper so be sure to keep receipts and note what was purchased and who it was for.

  • Home office expenses – If you run your business from home, you can possibly deduct certain costs from your taxes. If you qualify, you must have the necessary documents to support your claim, like utility bills or paid invoices for repairs.

  • Mileage deduction – The costs you incur from driving for business purposes is most often tax deductible. You can calculate your deduction by keeping track of all your vehicle expenses throughout the year and figuring out what percentage is attributable to business travel. Your other option is simply to deduct 54 cents for each mile you put on your odometer for business-related drives. Note that 54 cents per mile is the IRS’s 2016 Standard Mileage Rate and will likely change next year.

Financial technology for insurance agents

Cloud accounting software isn’t the only technology insurance agents should use. The apps and software listed below can help you with your other financial responsibilities:

  • Receipt app – Keeping track of your minor business expenses is much easier when you use a receipt app on your mobile phone. You can take a photo of the receipt and the details are automatically imported into your financial records.

  • Mileage app – Recording the miles you drive for business is also easier with the help of a mobile app. Just launch the app when you start your drive and it will use GPS to track the exact distance you travel.

  • Cloud document storage – Holding onto your documents is an important part of financial management. You can store them in the cloud where they’ll be organized and accessible.

  • Bill payment software – Managing and paying your bills on time can be easily accomplished with modern bill payment software.

  • Payroll software – If you have employees, simplify payroll and employee management with the right software.

BookKeeping Express (BKE) provides accounting, bookkeeping, expense management, payroll, and other financial services for insurance agents. Visit our industries page to learn more.

Expense Management Tips for Real Estate Agents

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Running a real estate business comes with its own unique set of challenges. Much of your business is conducted outside of the office, making expense management more complicated than it is for businesses that operate from a fixed location. You have the extra responsibility of holding onto your receipts and later recording and categorizing your expenses when you are in your office.

That being said, proper expense management is an important part of running any business. You can maintain a healthy cashflow and maximize your tax deductions by properly tracking your expenses. In this blog post, we’ll outline the different types of expenses real estate businesses typically incur and provide advice on how they can best be managed.

Common expenses

Common expenses consist of any money your business spends in its efforts to generate revenue. They’re paid for directly with business funds, which makes them easy to track and record in your general ledger. Some examples of common expenses include:

  • Advertising expenses – websites, mailing lists, print advertising, online advertising, promotional materials, and logo clothing
  • Professional fees – bookkeeping, accounting, and legal fees
  • Business travel – cab, bus, train or plane fares, tolls, and parking fees
  • Insurance – health insurance, errors and omissions insurance, business liability insurance, and business equipment insurance
  • Professional dues and fees – multiple listing service dues and dues paid to the local Chamber of Commerce, realtor associations, and real estate license renewal fees

Common expenses with special rules

Even though common expenses are easy to track, some have special rules when it comes to including them as a tax deduction. For instance, some real estate agents like to give gifts to their clients when a sale closes. The cost is deductible but only up to $25 per client per year. The cost of business meals and entertainment are 50 percent deductible so taking a client to dinner or to a special event can be a beneficial alternative to giving them a gift. You can learn more about the tax implications of giving gifts to clients in this blog post.

However, when businesses unfortunately get audited, it’s sometimes because of these expenses. Be sure to save your receipts and note the purpose of the gift, meal, or event and the client you treated. Additionally, there are reciept apps for mobile phones that we’ll cover more at the end of this blog post.

Special circumstance expenses

Special circumstance expenses generally don’t get paid for with business funds. Because of this, it’s more challenging to record them in your general ledger and extra documentation is needed when you deduct them from your taxes.

Two examples of special circumstance expenses typically associated with real estate businesses are home office expenses and vehicle usage.

Home office expenses are deductible but you need to first make sure your business meets the standards set by the IRS. If it does, you then need to properly calculate the deduction. You can learn more about how to qualify and calculate your home office deduction in this blog post.

The cost of driving in the course of running your real estate business is also deductible. But only certain types of drives are deductible so tracking your mileage is critical. You can learn more about the mileage deduction in this blog post.

Use technology to help you manage your expenses

Real estate agents tend to have a more difficult time managing their expenses than other professions but mobile apps and cloud software can be used to make things easier. Here’s what we suggest you use:

  • Receipt app – Instead of stuffing receipts into your wallet, just take a photo of it on your mobile phone. The receipt app will send the details to your general ledger
  • Cloud document storage – Get rid of that filing cabinet once and for all. You can store your documents in the cloud so they’re out of the way but still accessible
  • Mileage app – You can track the exact number of miles you drive for business. The app will update your records so you're prepared for tax time
  • Cloud accounting software – All your business transactions need to be recorded in your general ledger. Cloud accounting software connects with your apps and software so your records automatically get updated

BookKeeping Express (BKE) specializes in accounting and bookkeeping services for real estate businesses. We can help you manage and track your expenses so you can focus on helping your clients buy and sell homes. Visit our real estate agents page to learn more.