Bookkeeping guide for realtors and real estate agents

An organized approach to bookkeeping is a must for success in the real estate industry, whether you're a seasoned professional or just starting out. Proper bookkeeping keeps your finances in order and provides valuable insights that can drive business growth. In this blog, we’ll discuss the essentials of bookkeeping for real estate agents and realtors and walk through the best practices to help you keep your financial records accurate and organized.

Intro to real estate accounting and bookkeeping

Why is accounting and bookkeeping important for real estate agents? 

Common real estate business items to consistently track (with examples)

Real estate bookkeeping best practices

Key financial statements for real estate agents

Bookkeeping considerations for other real estate roles

Real estate bookkeeping mistakes to avoid

Should you outsource your bookkeeping?

How to hire a bookkeeper for your real estate business

Finding the right accountant and accounting tools for your real estate business

Intro to real estate accounting and bookkeeping

Real estate accounting and bookkeeping both involve tracking all income, expenses, and financial transactions related to your business. A good accountant and bookkeeper will track everything from sales commissions to office supplies and marketing costs.

Real estate trends in 2025 - Growth and projections

Real estate continues to attract passionate people searching for an active and flexible career. According to the National Association of REALTORS®, over 360,000 real estate brokerage firms operate in the US, employing millions of licensed real estate agents, and the US Bureau of Labor Statistics projects over 10,000 new jobs for real estate agents by 2033. 

What’s more, in the NAR Member Profile report, 73 percent of surveyed agents said they’re planning to remain a real estate professional for the next two years — and over half of the agents the NAR surveyed are associated with independent companies, with 88 percent employed as independent contractors. With so many agents and so much competition, the agents who succeed are the ones who maintain high standards. 

Real estate bookkeeping, in particular, is an area where agents have little margin for error. The tips we’ll discuss in this guide will help agents and aspiring agents work through the challenges of bookkeeping in the real estate industry.

Why is accounting and bookkeeping important for real estate agents?  

Effective bookkeeping is the backbone of a successful real estate business, whether you’re working as an independent real estate agent or managing a team. Some of the most critical aspects of your business depend on accurate bookkeeping, including:

• Managing cash flow: Real estate businesses need to manage cash flow carefully to ensure that funds are available to meet expenses such as payroll, office costs, and marketing. 
• Client funds stewardship: Bookkeeping is essential for correctly managing, tracking, and disbursing money that your clients entrust you with, such as earnest money and escrow funds.
• Staying compliant: The IRS requires all businesses to keep certain tax records and to file them as part of their annual business tax returns. By following bookkeeping best practices, you can ensure these records are accurate and organized.
• Planning and forecasting: Accurate business records are also critical for assessing the financial health of your real estate business, planning for future expenses, and identifying opportunities to grow.
• Protecting the bottom line: Proper bookkeeping also helps you avoid potentially costly mistakes such as compliance fines, ultimately helping to protect your profits. 

Is real estate accounting and bookkeeping difficult compared to other industries?

Accounting and bookkeeping pose some special challenges for real estate agents and businesses. Agents often handle large amounts of client money as part of complex transactions. Moreover, the compensation structure based on fees and commission means meticulous attention to detail is required to avoid costly mistakes like undercharging or overcharging clients.

Tax accounting is another common headache for real estate businesses. It’s common for real estate agents to accumulate small expenses like office supplies, meals, and especially vehicle mileage as part of their day-to-day operations. Many of those expenses are tax-deductible, but it’s critical to document them according to the IRS’s standards in order to avoid consequences like underpayment of taxes or even an audit.

These are just a few of the bookkeeping challenges that real estate agents can face. In this guide, we’ll break down some of the most important best practices of bookkeeping for real estate agents. Real estate professionals who are aware of these pitfalls in advance will have an advantage in avoiding and preparing for them. 

How many bank accounts should a real estate agent have?

A real estate agent should have both business and personal bank accounts to maintain separation between funds that shouldn’t be mingled. In addition, during the sale process, they may be responsible for opening escrow accounts for their clients.

Here’s the difference between the three types of accounts:

Personal account

This is used for personal expenses and should be kept entirely separate from business finances. It’s highly advisable for any business owner to keep their business and personal finances separate, and real estate agents are no different.

Business operating account

This account is used for daily business operations, such as paying for office supplies, marketing expenses, and other operational costs. It should exclusively be used for business purposes, to avoid intermingling funds with the agent’s personal account.

Escrow account 

An escrow account holds clients' funds, such as earnest money deposits, which are disbursed when the conditions of the purchase agreement have been fulfilled. Escrow accounts are generally opened with an escrow account or bank when the purchase agreement is signed, and real estate agents may be responsible for choosing an escrow company and opening an account for their clients.

Common real estate business items to consistently track (with examples)

These are some of the key numbers that most real estate agents and brokers should track as part of their standard bookkeeping:

Commission income

Commissions on property sales are the primary source of revenue for most real estate agents, so it’s critical to record them accurately. Agents should make sure to record both the original commission account from the contract as well as any splits or deductions. We’ll talk about more tips for recording commissions later.

• Example: The agreement on a $375,000 home sale includes a 5.5% commission of $20,625. The agent records the total commission, a 50-50 split with the seller’s agent, a 70-30 split with her brokerage, and her final take-home pay of approximately $7,200. 

Operating expenses

Operating costs include everything a real estate agent needs to run their business, from office supplies to vehicle costs to marketing expenses. Many of these expenses are tax deductible, so agents should be sure to save receipts on purchases they make for business purposes.

• Example: An agent’s monthly expenses might include gas for their vehicle, ad buys on social media, rent for an office space, and various office supplies and software subscriptions. She saves the receipts for these expenses and sends them to her accountant during tax filing season.

Leads and conversions

Tracking leads helps real estate agents understand how well their demand-generation and customer-acquisition efforts are working. Tracking conversions, meanwhile, allows agents to understand which percentage of their leads they successfully convert to sales. The long and expensive nature of real estate transactions means that conversion rates tend to be low, so it’s critical to have robust data that can help you fight for every sale.

• Example: An agent acquires 23 new leads in a month from a combination of social media marketing and word-of-mouth referrals. He enters these leads in his customer relationship management software and tracks their progress. Two of these leads convert and purchase properties, giving him an 8.7% conversion rate for the month.

Days on market (DOM)

DOM is a key success metric for real estate agents. When listings sell quickly, it’s a sign that the agent is effectively bringing together buyers and properties in a way that suits market conditions. Many agents look at their average DOM and compare it to market averages to get a feel for how well their sales strategies are working, as well as the general temperature of the local market.

• Example: An agent looks at her average DOM from the six properties she’s sold in the past year. She adds up the DOM for each deal and divides by six, arriving at an average of 34.3 days — approximately 14% faster than the average DOM for her market of 40. As she sells more properties throughout the year, she continues to update and track her DOM numbers.

Referrals

Word-of-mouth referrals are a major element of how most real estate agents acquire new customers, so tracking them is crucial. Some agents use spreadsheets, while many opt for a more full-featured referral tracking software system. Either way, robust tracking helps agents identify productive sources of referrals and activate new ones. 

• Example: An agent tracks his referrals using the referral software platform provided by his brokerage. He notices that over a third of his referrals come from a specific network of contacts and increases his focus on nurturing relationships in that network. 

How can I track real estate agent expenses effectively?

When it comes to managing expenses as a real estate agent, using software like QuickBooks can make all the difference. QuickBooks offers several important benefits for real estate agents, including:

1. Automating expense tracking, saving you time and reducing the risk of errors by automatically recording and categorizing your expenses.
2. Providing real-time insights at your fingertips so you can make informed decisions on the fly and prosper in the competitive world of real estate. 
3. Making tax preparation stress-free with all your expenses and receipts organized in one place so you can maximize deductions.
4. Integrating with your CRM, expense management, or other software suites, so you can customize and power up your bookkeeping workflow while keeping your favorite tools.

Real estate bookkeeping best practices

Successful real estate bookkeeping requires you to follow a few best practices that will help streamline your financial management and boost your business’s success. Here are some of the key bookkeeping best practices that real estate agents adopt to help their businesses thrive:

Use an accounting software

Software solutions like QuickBooks accounting software help simplify your bookkeeping tasks, automate processes, and ensure accuracy. Tasks like tracking mileage and organizing receipts can be some of the most onerous parts of the job when done manually, but the right accounting software can save you hours of effort via automated workflows. What’s more, accounting software allows you instant access to financial records whenever you need them.

Maintain separate accounts

Keep separate bank accounts for personal and business finances. This helps avoid confusion and makes tracking business expenses easier. If you hold earnest money in escrow for clients, as many real estate agents do, it’s important to have a separate account for client money in which you rigorously and separately track all deposits and withdrawals. 

Regularly reconcile accounts

Reconcile your accounts regularly to ensure your financial records match your bank statements. This helps identify any discrepancies early and keeps your books accurate. For real estate agents, reconciling commissions is especially important. Check the commission deposits in your bank account and verify that they match up with the commission agreements you’ve signed.

Track income and expenses diligently

To assist with budgeting and tax preparation, carefully track all sources of income and every business expense so you have a clear picture of your financial health. Real estate agents often have both unpredictable income due to the commission payment structure and many tax-deductible expenses such as mileage and home offices. Streamlined, automated record-keeping can significantly reduce the burden of income tracking and help ensure you’re able to claim all the deductions you’re eligible for.

Monitor cash flow carefully

Speaking of commissions, they can also make cash flow a challenge for real estate agents. Long transactions mean that commissions may take months to arrive, and the inevitable slow periods can spread cash flow thin even for an agent with a thriving business. Realtors use a variety of strategies to keep cash flow more consistent, including saving a portion of their commissions as a cushion for leaner times and using cash flow forecasting tools to plan ahead.

Standardize processes for documenting transactions

Make sure every stage of every transaction is thoroughly documented, from initial commission agreements to counteroffers to closing costs. Create a standardized workflow for assembling all the necessary documentation for every transaction, and use your accounting software to organize these essential files. 

Stay compliant with regulations

Stay informed about and compliant with all relevant financial regulations and tax laws to avoid legal issues and penalties. Real estate agents are required to report commissions as 1099-NEC income and pay estimated quarterly taxes on them. In addition, common tax deductions such as mileage, software, and continuing education classes can all be tax-deductible for realtors, but only if they’re documented in accordance with IRS rules.

Key financial statements for real estate agents

Every real estate agent who operates their own business should know how to read and interpret the “big three” financial statements: balance sheets, cash flow statements, and profit/loss statements. Bookkeeping software like QuickBooks makes these financial statements easy to pull and customize, but you’ll need to make sure you understand them thoroughly.

Here are the basics an agent should know about all three major financial statements. 

Balance sheet

Your balance sheet shows the overall financial position of your business via a simple formula:

• Assets minus liabilities equals equity

Here’s how these categories break down:

• Assets are things that your business owns that have positive economic value. They can include anything from office furniture to accounts receivable to brand and domain names. Remember to note both current assets (such as cash or unpaid commissions) and fixed assets, such as business vehicles or websites. 
• Liabilities are the financial obligations that a business owes. Liabilities might include loans, accounts payable, monthly rent, or balances on a business credit card. 
• Equity is what’s left over when you subtract liabilities from assets. It represents the total current value of your business.

Reading a balance sheet is relatively simple. Assets are almost always listed first, then liabilities. Types of assets and liabilities get their own subtotals, which helps you break out data points like your ratio of current to fixed assets. At the bottom, equity is calculated based on the value of the assets minus the liabilities. 

For real estate agents, it’s important to remember to include commissions that have been earned but not yet paid in your assets. However, you should only include commissions for which you have a signed and binding purchase agreement. 

Cash flow statement

A cash flow statement shows the amount of cash that enters and leaves your business. It helps you understand your business in terms of liquidity and solvency — that is, your ability to meet day-to-day obligations like payroll and rent.

The key to creating and interpreting cash flow statements is to remember that they represent inflows and outflows of cash (and cash equivalents) over time, rather than a static snapshot. Cash flow statements are especially important for real estate agents because commission income is challenging to predict and payments often take a long time to finalize. It’s critical that agents monitor their cash flow so they can continue to meet expenses even when cash flows are slower.

Depending on your needs, you can use several different types of cash flow statements. The direct cash flow method is the simplest option. Using the direct cash flow method, you’ll record the inflows and outflows of cash in your business from operations, investment, and financing activities. Remember to select a period for analyzing your cash flow, whether it’s a month, a quarter, or even a year.

Businesses with a more complex lineup of assets and liabilities may choose to use the indirect cash flow method instead. This method includes depreciation, amortization, and increases and decreases in accounts payable and receivable. If you’re using the indirect method, it’s an especially good idea to work with an accountant who can help you understand how the adjustments work. 

Profit and loss statement

A profit and loss statement, also called a P&L or income statement, is the final “big three” income statement. It shows your business’s net income after expenses — in other words, its profitability — over a specific time period. The basic formula is simple:

• Revenue minus expenses equals profit or loss

To create a profit and loss statement, you’ll follow three basic steps:

1. Decide what period of time you want to look at. Many businesses create monthly P&L statements, so that’s a good place to start, although the irregular nature of commission payments can make quarterly P&Ls more useful for real estate agents. Then, calculate your gross revenue for that time period. For most agents, this will primarily include commission income. Make sure to include only the final commission income you receive after splits with brokerages or other parties. 
2. Most businesses will calculate Cost of Goods Sold (COGS) at this step — but since you probably don’t have an inventory of goods that you buy and sell yourself, most agents will go straight to calculating operating expenses. This can include everything from gas to marketing expenses to staging and photography expenses for a home, if you paid them yourself. 
3. Subtract your operating expenses from your gross revenue. This is your profit for the time period in question. Comparing your P&L to previous periods to find month-over-month or year-over-year growth is an essential tool for assessing the growth and health of your business.

If you’ve got questions about any of these reports, working with a CPA or another qualified accountant will help ensure you stay on the right track. 

Bookkeeping considerations for other real estate roles

While we’ve focused on agents in this article, other professionals in the real estate industry need to be aware of bookkeeping considerations, too. We’ll take a quick look at some of the most important facts these professionals should know.

Real estate brokers

Real estate agents must either work under a broker or have a broker license themselves, so all of the information in this guide is applicable to brokers. However, there are some special considerations that apply specifically to brokers:

• Commission splits: Documenting commission splits is always important, but it’s especially critical if you have brokers who work under you. A complete paper trail helps make sure that all of your payments to agents and other parties are thoroughly documented. 
• Holding accounts: Brokers often use holding accounts to control the disbursal of commission payments and maintain more structured and consistent payment schedules. Make sure that all payments to and from holding accounts are documented in your records.
• Other income streams: Some brokers also receive revenue other than commissions, such as referral fees from other licensed real estate professionals. Don’t forget to include these in your bookkeeping. 

Real estate investors

If your interest in real estate is primarily as an investor purchasing properties, your bookkeeping considerations will be quite different from an agent or broker. Bookkeeping for real estate investors requires robust documentation of transaction costs, as well as property valuation. 

• Acquisition and disposition: Real estate transactions are long and full of complex costs, from broker commissions to notary fees. Tracking these costs is crucially important, both for tax purposes and for determining the health of your business through P&L and other financial statements.
• Deductible expenses: Property owners can often deduct expenses related to maintenance and improvement on their properties, but you’ll have to track them to ensure you can legally deduct them.
• Depreciation: Most real estate investors use depreciation to spread out the cost of a property purchase over multiple tax years. Rules for real estate depreciation can be challenging to grasp, so read up on the IRS’s property depreciation rules and consider using a CPA’s services to help you understand the complexities.

Property managers

Whether you’re a landlord managing your own properties or you run a property management business, bookkeeping is an essential part of property management. Make sure you’re taking these factors into account as part of your bookkeeping practices: 

• Tenant funds tracking: As a property manager, you’re the steward of the money that tenants entrust you with. Rent payments, security deposits, and move-in fees should be tracked closely and reconciled regularly with your business bank account statements.
• Deposit requirements: Security deposits from renters are subject to special laws in many jurisdictions. Depending on the location of your properties, you might have to place security deposits in a separate bank account or even pay the interest that accumulates on them to your tenants. 
• Maintenance tracking: Remember to track all payments you make for property maintenance, including payments to service vendors like plumbers, electricians, and painters. Many maintenance expenses are tax deductible, and property owners won’t want to miss out on additional opportunities to lower their tax bill. 

Real estate bookkeeping mistakes to avoid

Now that we’ve covered the best practices for real estate bookkeeping, it’s equally important to be aware of common mistakes that can undermine your financial management. Avoiding these pitfalls will help keep your books accurate and your business running smoothly.

Mixing personal and business finances

Always keep personal and business accounts separate to avoid confusion and ensure accurate recordkeeping.

Neglecting to reconcile accounts

Regularly reconcile your accounts to ensure your financial records match your bank statements. Neglecting this task can lead to unnoticed discrepancies and errors.

Poor expense categorization

Poor categorization can result in incorrect financial statements and missed deductions. Categorize expenses correctly to ensure accurate financial reporting and easier tax preparation.

Ignoring cash flow management

Monitor your cash flow closely. Ignoring cash flow management can cause financial strain, making it difficult to cover expenses and plan for growth.

Inadequate documentation

Keep detailed records of all transactions to support your financial statements and tax filings. Inadequate documentation can cause issues during audits and complicate tax preparation.

Overlooking depreciation

Don’t overlook asset depreciation. When you properly account for depreciation, you can get significant tax benefits and a more accurate picture of your financial position.

Incorrectly recording income

Incorrectly recording income may lead to misstated financial statements and potential issues with tax authorities, so make sure to record it properly.

Not preparing for tax season

Prepare for tax season throughout the year to avoid rushed, inaccurate filings and missed deductions.

Forgetting to backup data

Regularly back up your financial data to prevent losing important information and facing major setbacks if there are technical issues.

Should you outsource your bookkeeping? 

A professional bookkeeper brings expertise and efficiency to your financial management. They ensure your records are accurate, up-to-date, and compliant with all regulations. By outsourcing, you can free up valuable time to concentrate on client relationships while expanding your real estate business. A bookkeeper can also provide insights and reports that help you make informed financial decisions, ultimately contributing to your business's success. Live accounting support software like QuickBooks Live offers easy options to hire a bookkeeper or accountant with the skills your business needs.

Here are some telltale signs you may need to hire a bookkeeper:

Time constraints

If you spend too much time on bookkeeping tasks and not enough on your core business activities, it's a clear sign you need help.

Bookkeeping errors

Consistent mistakes in your financial records can lead to bigger problems down the line. A professional can help reduce these errors and maintain accuracy.

Significant growth 

As your business grows, your finances become more intricate. A bookkeeper can manage this increased complexity and ensure your financial systems scale with your business.

How to hire a bookkeeper for your real estate business

Ready to hire a bookkeeper? Here are the steps to follow and key considerations to keep in mind when selecting the right professional for the job:

1. Find experts who use reputable financial software

Look for bookkeepers proficient in using accounting software like QuickBooks. Knowing industry-leading software ensures accurate and efficient financial management.

2. Check the bookkeeper’s credentials

Credentials show a commitment to high standards and ongoing education, so verify their qualifications and certifications. Look for credentials such as Certified Bookkeeper (CB) or membership in professional organizations like the American Institute of Professional Bookkeepers (AIPB).

3. Meet to see if they’re a good fit 

A good fit will help build a strong working relationship. Schedule a meeting to discuss your needs and see how well they communicate. Make sure they can explain financial matters clearly and are responsive to your questions.

4. Determine how much help you need 

Figure out the specific bookkeeping tasks you need assistance with, such as transaction recording, expense tracking, or financial reporting. Clearly defining your needs will help you find a bookkeeper with the right skills and determine the scope of their services.

5. Contract their services 

Once you've found a suitable bookkeeper, outline the terms of their engagement in a contract so both parties understand their responsibilities and expectations. In the contract, specify the services they will provide, the frequency of their work, and the fees involved.

Finding the right accountant and accounting tools for your real estate business 

Whether you're just starting out or looking to streamline your operations, adopting a solid bookkeeping system can transform how you manage your finances. Tools like QuickBooks can simplify this process with features such as automated expense tracking, easy income reporting, and real-time financial insights. These tools help you stay organized, save time, and make smarter business decisions. And when the time comes, QuickBooks Live can help you find a qualified bookkeeper who can provide the expertise and reliability you need.