Do you get overwhelmed by the thought of looking at your bank account balance? Are you sure you know how much money goes in and out of your rental business?
If you're a landlord worried about your finances, you probably need to evaluate your rental property accounting strategy.
In this article, we'll explore five ways you can streamline your real estate accounting so you can bring in more money and worry less.
1. Hire a Professional
One of the best property management tips when it comes to your finances? Leave it to the experts.
Consider working with a property management company to track your income and expenses. You can also utilize a bookkeeper, or a certified public accountant (CPA).
You can have more peace of mind and outsource a great deal of work to someone who knows what they are doing.
2. Evaluate Your Financial Statements
Financial statements are a great way to view money in a way that makes sense. Some of the common types of financial statements include:
- Balance sheet
- Income statement
- Statement of cash flows
- Statement of owner's equity
It helps to know the accounts that go into these statements, so you can properly evaluate your real estate accounting. Consider taking a basic accounting course so they'll be easier for you to understand.
3. Keep Records in the Cloud
Gone are the days of paper records and messy file cabinets. Uploading your documents to the cloud is a surefire way to keep them safe and organized.
Some accounting software, such as QuickBooks, can extract financial information from invoices and receipts, creating transactions from the documents themselves.
4. Use Separate Accounts
If you're an accidental landlord or a first-time property owner, consider this real estate accounting tip: always separate your personal and business bank accounts.
The same concept goes for debit and credit cards. It's easy to just put an expense on your personal card, but you may forget to note it in your investment property finance transactions.
All of those possible tax deductions can also add up. You can't write off business expenses when you can't remember what you paid for.
5. Stay on Top of Taxes
When tax season comes around, the last thing you need is to wonder what's going on with your real estate accounting.
Make sure to save all documents and expenses as potential tax write-offs. Look into tax breaks in your state, county, or city. You may be surprised by some of the ways you can save money.
Hire a CPA to prepare your annual tax return. They can ensure that all the records are accurate and complete. It is much easier than using a do-it-yourself option for complex business transactions.
Streamline Your Rental Property Accounting
Whether you're an experienced property owner or a new landlord, you can always improve your rental property accounting. Use this guide to create a process that works best for your needs.
PMI Arka is a full-service property management company, serving the greater Seattle with our expertise. Reach out to us today for your free rental consultation.
