Are you ready for year-end tax preparation?
It's hard to believe that there are only a few days left between you and 2023. As 2022 ends and you forge your path forward into 2023, you must undertake some housekeeping to close out 2022 and start 2023 in the best position possible as a real estate investor.
As a real estate investor, it might not seem that there is much to do. However, each year, you need to assess your plans, goals, and the state of your investments. Before the year closes out, make sure to go over this essential end-of-year checklist.
To prepare for tax season, we strongly suggest you:
Read below to find out the best ways to accomplish the preceding tasks.
You want to make sure you prepare everything for filing. Tax day seems far off in the distance, but April 15th comes fast in reality. As a result, it's never too early to get your documents in order.
Right now is the optimal time for real estate investors to collect all documents related to filing taxes. Some things you can do to make this process easier include:
Ensuring that you have all your taxes settled ahead of time reduces stress and allows you to move past the financial commitments of 2022 and focus on growing your business in 2023.
Paper receipts can be burdensome, so it might be easier to pull out your bank records and highlight all your expenses. Some apps make tracking expenses more manageable. We like Expensify.
You plan on growing your business in 2023. One way to maximize your deductions is to purchase business vehicles and additional assets. Then you can schedule business meetings. Then, claim them as expenses on 2022's taxes.
As the year ends, you want to recheck your deductions to get your taxable income as close to zero as possible. One of the ways to lower your tax responsibility is to file deductions. You can file deductions on:
Being a real estate investor comes with plenty of tax deductions. The following list is not comprehensive but provides you with some ideas of what you can deduct in addition to the standard deduction:
It's hard to maximize your profit if it's getting eaten up by all the sales, properties, federal income, and state income taxes you must pay. As a savvy real estate investor, you need to finesse your documentation and deductions and realize the benefits of being a landlord.
An easy way to make sure that you are optimizing your end-of-year deduction is through Royal Legal Solutions' Peace of Mind Program. We hold all your tax accountability through the program, work with your account executive and CPA to maximize deductions, and shelter your assets.
Contact [email protected] to learn more about how the Peace of Mind Program will protect you and your assets.
As a real estate investor, you know the importance of having your assets protected by an LLC. Depending on where you do business, having an LLC means paying a yearly franchise tax.
The franchise tax is a required fee that your LLC pays for the right to do business in any given state. This tax is separate from other federal or state income taxes required by government entities.
Franchise taxes are required:
In addition to franchise tax considerations, as an LLC owner, you will want to:
When you began your real estate investing journey, you had a set of goals in mind. Now is the time to revisit those goals, assess your performance, and make needed adjustments to accomplish your goals.
As you enter the new year, you should focus on growing your business. That means putting 2022 tax burdens behind you. Make sure you finish 2022 strong by having a clear and detailed plan where you:
A solid plan in place will allow you to earn more and grow your real estate portfolio.
To learn about powerful tax savings strategies that you can use to keep more of your earnings, book a tax consultation by taking our tax quiz. The information you provide will enable us to have a productive discussion the first time that we speak.
Scott Royal Smith is an asset protection attorney and long-time real estate investor. He's on a mission to help fellow investors free their time, protect their assets, and create lasting wealth.
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