How to Organize Your Real Estate Business for Tax Time

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You’re probably thinking, “well this article title sure sounds like a real estate guru sales line” but I promise you, I have nothing to sell you. Hopefully you’ve heard the good ol’ saying of “a penny saved is a penny earned”. It’s one of my favorites, and one that pertains exactly to the habit you should consider implementing into your business.

It’s our favorite time of the year… TAX TIME! (*clicking sarcastic font ‘off’ *). I’ve been going through my spreadsheets and it dawned on me that this would be an appropriate topic to talk about given the time of year.

First, I’m a big believer in having a CPA do your real estate business taxes. I’ve seen both sides of the argument, but I try to walk right in the “middle” of the debate. To me, the debate comes down to how you define “do”.

If you define having a CPA “do” your real estate taxes as…

“Here you go Mr. CPA” as you hand him a box full of receipts, invoices, 1099’s, etc. and then walk away and say, “Have a nice day” then while I won’t contest whether or not they get done, what I will contest is the efficiency, knowledge and profitability of that decision.

If you define having a CPA “do” your real estate taxes as…

“Here you go Mr. CPA, I’ve emailed you over my “insert numbers tracking software here” information, please let me know if you have any questions.” then I will contest not only have you accomplished efficiency, but you’ll also be walking away with knowledge and profits.

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Efficient Real Estate Organization

I hope as you read the headline you just didn’t stare down at a shoe box full of invoices and receipts. If you did, don’t get discouraged, but do go out and buy a scanner/or some folders. It’s time to start organizing…

Organization is Step 1 in how you can get paid to improve your business.

  • 1. I have shoe box in my office (I know what you’re thinking, let me explain myself!) where I will drop the hard copy paper invoices/receipts as I get them.
  • 2. At least once every two weeks I pick up the shoe box, and begin scanning everything into my computer. (I use this scanner. Bigger price tag, but check out the reviews on it, and I can attest the thing is awesome)
  • 3. After all paper is scanned in, I throw it away. No file cabinets in my office! I then move the scanned documents onto “the cloud”. In short, “the cloud” is storage on the internet, so that for example, if my computer ever goes dead, I can go to my “cloud” from another computer and still access all documents. (I use this cloud provider)
  • 4. I place the scanned documents where they should go in my “virtual” filing cabinet on the cloud, and I’m done.

Efficient Real Estate Book Keeping

Organization is Step 1 in getting paid to improve your business. Step 2 is all about the book keeping. I personally use Excel Spreadsheets, but there are a host of other choices. This isn’t about ‘whose’ product you should use, but that you SHOULD be using something. Even if its in a simple way of keeping track of monthly expenses.

The more in depth you can get with this stuff the better, but as long as you, at a minimum have “organized” chaos, that is exponentially better than “shoe-box chaos”.

Knowledge and Improvement

Sticking with this theme, a shoe-box full of chaos isn’t going to tell you much about your company. Where is the money going? How much is going where? Where is money coming from? How much is coming from these places?

Organization and book keeping will make the answer to all these questions a click away. And with the answer to these questions comes the all important numbers such as revenues, expenses and cash flow.

You can’t improve anything and make more money if you have no knowledge of your numbers. You can’t have knowledge of your numbers if you don’t have book keeping. You can’t have solid book keeping if you have no organization. See where I’m going with all this?

Getting Paid

This is the beautiful thing. While not always the case, the majority of the time “improvement” (in regards to business) is defined as bringing more money into the business. Whether that be through cost savings or additional revenue, “improvement” involves making the company more profitable. By doing all of the above mentioned, odds are, you will see at least one thing that can either be slashed from the  budget (cost saving – “a penny saved is a penny earned”) or something that can be done for cheaper (perhaps buying in bulk).

To bring this article full circle, I task my CPA with looking at my numbers and seeing what ways they can be improved upon from an accounting perspective. I do NOT task my CPA with organizing, and then putting them into a book keeping software. Do you know what the CPA has to use to accomplish those two steps? Time. Do you know what the cost of time is for a CPA? Not cheap.

In summary, be sure you define “do” as your CPA simply looking for ways to improve upon your numbers from an accounting angle. Everything else should be on your shoulders. Doing this saves the CPA time and headaches which in return saves you money. When you save money, you make more.

What about you? What tips and tricks do you use to make your organizing and book-keeping efficient? Thoughts on CPA’s? Myself and others I’m sure would love ideas how they can create more efficiency within their real estate business.
Photo: kozumel

About Author

Clay Huber

Clay (G+) is a licensed real estate agent and the owner of Huber Property Group, LLC, a real estate investment company located in Grand Rapids, MI. His company purchases distressed properties with the main exit strategy of fixing them up and reselling with owner financing, particularly, land contracts.


  1. I use excel for my profits and expenses. The categories I use are the ones the IRS has for documenting. Every property gets a folder labled with the address and year. I calculate each folder every 3-4 months. Most of the time there’s not a lot of expenses. CPAs are valuable, but I won’t be using them anytime soon. If I have questions, I ask them here, read IRS publications, or call the IRS.

    • Very nice Shanequa. Sounds like you have a system in place, but more importantly, it is a system that works for you.

      I’d prefer to let the CPA look over my numbers since that what they do for a living, but that’s just my personal preference.

      Thanks for the comment!

  2. Thanks,
    This is my biggest flaw. I have many, but this is the biggest one. My wife and I have told ourselves that we have to change to be more effective. I will use this style and tweak, modify, and adjust as needed. Thanks.

    • Steve, welcome to the club of “having many flaws”. I believe we all belong to that club, so no shame in that.

      I’ll be honest, at times it can get annoying to scan things into the computer and put them where they need to go; however, when four months later comes around and you need to locate something, it is WELL WORTH going through the little annoyance.

  3. Clay,

    I use the shoe box and the at the end of the year, I organize receipts over a weekend. I would like to start scanning and filing in my cloud, which I already have, but don’t use for my expenses. What a great idea. I would love to see the layout of your expense sheet since I am not sure how to format that.

    • Thanks for the comments Michelle.

      Since you are already familiar with the cloud, I’m sure you can see that advantages of getting all your record keeping into your ‘virtual’ filing cabinet.

      As far as my spreadsheet, it is by no means rocket science. I have a the month I’m referring to, then I have one column for the expense and another column for category (Website, Overhead, Marketing, etc.) and a final column for “comments” where I can leave myself any additional notes about that particular expense. I’m sure I could get even more detailed, but for me, it keeps things simple which is my goal.

  4. Insightful article, but after all the organizing and arranging, are you really saving time? I have two main questions. If I can ever get those resolved, I’ll be all-in with a scanning/cloud solution. I like the cloud, and use it to back up all my computer files nightly. The issue is time. My time. So I’m sorry if I sound negative, but…

    1. Like most, my receipts range from tiny (cash register recpt) to 8 x 11, even larger. Can a scanner take my pile of different sized recpts in stride and not choke on them, get jammed, lose some, etc?

    2. I’m a full timer. A week’s receipts from my dozens of properties may include expenses from ten or more of them. Currently, I write the number of each property on the corner or each paid recpt, have my bookkeeper enter them in my Quicken Rental Property Manager (I’m still using the 2004 edition, which works fine), then file them in a folder-accommodating “milk crate” by property for storage. I keep them in the basement, each box has a year, in case I’m audited. Does a scanner exist that can put all my differently-sized recpts into the correct properties folder, plus note the payee, the amount, the date, plus keep running totals for tax time? Now that I would pay for!

    Also there is the issue of keeping files for each handyman and contractor’s pay, since I have to 1099 them each year. And my rent rolls. And the other income from my hard money loans. And the credit card receipts and bank statements. And the dozens of other paperwork tasks I have to do every year about this time.

    I’m not trying to talk you out of your system, but it’s hard for me to get it. It boils down to time, and to keeping my receipts in a format such that if I ever get audited about a certain expense from, say, my “5917” property from July of 2010, I’ll be able to find it, first in my Quicken, then safely stashed, hard copy, in my 2010 box. Perhaps it sounds very 19th century, and I know systems are important, but until I see one that is truly seamless, I’d rather pay a $10/hour assistant to deal with the paperwork and filing, and not spend hours learning how to make technology serve me (and only half-heartedly at that), rather than me serving it.

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