By: Karen G. Hatcher, CPM®
As a thriving entrepreneur captivated by numbers, I’ve discovered my niche at the intersection of real estate and business management. 15 years of unwavering dedication to exceeding client expectations, because at Sovereign Realty + Management, your success is our success.
This incredible journey instills a deep sense of gratitude within me, as countless opportunities and blessings have come our way. A combination of hard work, resolute dedication, and unshakable self-belief laid the groundwork for our achievements.
Along this path, I have learned invaluable lessons that propel my business forward. My years of experience have taught me the crucial significance of operating my enterprise as a legitimate business, fostering growth and efficiency.
My goal is to inspire other entrepreneurs while emphasizing the importance of running a business.
When I got licensed, it was 2007 and we were amid the so-called “famine”. In 2008, when our economy hit a recession I quickly learned to operate my business lean, controlling costs, and ensuring that my business had proper financial structures in place.
- Create a company. You do not have an actual business until you create a company. There are different types of companies, however, I found that starting, an LLC S-Corp was most beneficial for me.
This allowed me to reduce my personal liability from the business, pay myself a reasonable salary, remove any self-employment taxes, and any of the additional profits flowed through to my personal taxes.
- Separate your personal and business finances. You must keep your personal and business finances entirely separate. In business terms, you do not want to commingle your funds. Commingling your fund personal liability protections that you have in your LLC exposes you to personal liabilities.
Once you establish your company, get an EIN or Tax ID number. Open separate bank accounts and use different debit cards for personal and work-related expenses. This will not only make accounting processes simpler but also ensure that you are legally complying with tax rules.
By establishing separate accounts and paying myself through payroll, I was able to delineate personal finances from those of the business. It also made buying a car, getting mortgages, etc. so much easier.
- Set up a structured payroll. Rather than paying yourself irregularly or at random intervals, establish a regular salary for yourself through payroll.
This demonstrates the professionalism of your company, to your employees and ensures you pay personal income taxes and necessary employer contributions.
Having a payroll company processing payroll also allowed me to grow in benefits that I can offer my team like a company IRA matching program.
- Control costs. One key aspect of treating your company as a true business is being mindful of expenses. Analyze costs on an ongoing basis to identify areas where savings can be made without compromising the quality of goods or services.
Keep an eye on subscriptions and conduct an annual technology audit to maximize the use of your current software and save money. Be mindful of subscriptions, they can add up. Cancel redundant subscriptions or downgrade to save money for other priorities.
- Invest in professional accounting software. As someone who loves numbers, it’s essential for me that financial records are accurate and well-organized. Investing in reliable accounting software will streamline bookkeeping processes and provide valuable data on financial performance.
I use QuickBooks, but there are many other great software out there. You want it to be easy to use and then easily accessible by your bookkeeper and CPA for reconciliations and using the four-eye principle. Every crucial transaction or process gets reviewed by two individuals before finalization. Think of it as an extra layer of security and accuracy.
- Set up financial systems. Establish standard operating procedures for invoicing clients, managing cash flow, monitoring expenditures, and paying bills. Implementing efficient systems will save you time, effort, and money in the long run.
I also believe “The Secret” applies to financials. I pay my people and vendors on time because I expect to be paid promptly and on time for my services. The majority of my business is set up where I receive revenues upfront. Property Management revenues are timed differently than real estate commission revenues.
- Hire a consultant if needed. If you’re unsure how to organize your business optimally. When faced with uncertainty regarding the best approach to structuring and streamlining processes, an experienced consultant or coach can provide expert guidance, tailored solutions, and an unbiased perspective such as a business mentor, communications expert, etc.
The other benefit is that they get you to your goal sooner! Hiring a coach will put your journey in the express lane. I swear by coaches and love mine dearly. These professionals leverage their knowledge of industry best practices, resource management, and strategic planning to identify areas for improvement and implement effective changes.
Building a thriving business is a marathon, not a sprint. It takes grit, dedication, and a willingness to learn from every stumble along the way. If you’re feeling overwhelmed, remember, you’re not alone.
Taking these steps, from separating finances to seeking expert guidance, might feel like climbing Mount Everest, but trust me, the view from the top is incredible.
So, take the first step today, and let’s build our business empires together!
Did I miss anything? Sound off in the comments below.