I am going to be brutally honest: figuring out how to save for taxes is the toughest part of being a real estate agent. If you can stick to our advice, you'll be smiling, too!
Your income comes sporadically, and it will take EXTREME discipline to save money for your taxes. Even though this will be challenging, the earlier you start the better off you will be.
The secret is to have a plan in place before your commission checks come in. Create two additional bank accounts: one for taxes and the other for your pay. Set a certain percentage into each account the day you receive commission and DO NOT touch those accounts for anything other than what they are designed for.
The percentage you should transfer into each account depends on many factors. Your tax professional should be able to help you with the percentages, but as a general guideline transfer 20% into your tax account and 35% into your pay account.
These are very general guidelines, but a good starting point. For customized advice, reach out to your local tax professional or send us a message for a recommendation to a firm we trust.
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