Anyone
Can Benefit — Some might be surprised that someone
so young with no spouse or dependents and with so little to invest
would seek help from a professional financial planner. But the notion
that only those with complicated lives and lots of money to invest
can benefit from a financial planner is a common misconception.
Self employment Issues — Issues
of greatest importance to Realtors are those shared by others who
are self-employed. One is if they’re not an employee, they’re
responsible for their own retirement.
Realtors should also consult with someone familiar
with tax laws and how they affect independent contractors. The self-employed
must pay their own social security tax and need to know when payments
should be made.
Realtors should learn more about tax deductions available
to them such as automobile deductions and when and how to write
off equipment purchases. One section of the tax code may allow small
businesses to treat certain depreciable equipment as current expenses,
allowing them to deduct the full cost rather than a portion over
several years. And there may be other deductions they don’t
know about or don’t know how to handle.
Other potential deductions include trips, meals, supplies,
advertising, online service charges, gifts, uniforms (shirts with
company logo) and office equipment like copiers, personal computer
and laptop computers.
Diversify — Realtors planning
to invest in real estate should understand tax laws that pertain
to it. One warning is that many Realtors invest in real estate because
it’s familiar to them, and too many have an inordinate percentage
of assets in an industry that pays their salary and accounts for
much of their net worth in the form of the value of their homes.
You’re the Boss — One
common mistake Realtors make is not realizing that most are running
their own business, and planning for an entrepreneur is different
from planning for a company employee. You have the ability as an
entrepreneur to invest in your business, and that creates the greatest
potential for return that most Realtors ignore.
Realtors tend to not invest enough in their business,
preferring instead to invest in the stock market or upgrade their
quality of life. They tend to lack enough disability and life insurance
and generally pay little attention to estate planning. The reasons
for lacking disability insurance or having little is because it’s
expensive and difficult to obtain. A low expense, high impact item
often ignored is term life insurance, or umbrella coverage on top
of homeowners and car insurance. Other mistakes are not maximizing
401K deductions and stock option plans offered by a spouse’s
employer and lack of documentation to justify tax deductions.
Hire an Expert — Not everyone
believes on hiring an expert. But it is similar to a person hiring
a Realtor to help with the process or selling property, no matter
how intelligent you might be and no matter how carefully you study
the issue, you can’t possibly bring the same knowledge and
expertise to the process as an experienced Realtor.
Do It Yourself — Not just Realtors,
but much of the population believes the need for professional financial
planners is exaggerated and that certified financial planners in
particular are overrated. Most Realtors don’t earn enough
to warrant the fees paid.
Just Do It — Whether you do
it yourself, attend classes, or hire a professional financial planner,
the results are likely to be better than doing nothing. Not having
a financial plan – no matter how basic – is like trying
to drive to a strange city across the country without a map.
The Structural Skeleton of Your Plan
Association fees
Business travel
Car: insurance, maintenance, payments
Computer hardware and software
Equipment
Insurance: auto, disability, health, life
MLS fees
Postage
Printing Costs: business cards, stationery
Promotion: brochures, signs, open houses, advertisements
Retirement
Salaries: personal assistants, secretaries
Telephones: cellular phones, office phones, pagers, long-distance
charges
A financial plan will help you to be proactive, so when you confront
a situation, you can make most out of those situations. |
