Are you a landlord overwhelmed by the thought of managing your finances? Do you avoid looking at your bank account balance or organizing documents because it might be too much?
Rental property accounting isn't fun, but it is essential to maintain a rental property business. Here are some essential accounting tips for landlords to make your life, and finances, easier.
1. Work With an Accountant
An accountant or bookkeeper is a professional who can handle all aspects of financial management. They are familiar with accounting software such as QuickBooks, so they'll be able to record transactions and run reports for you.
In addition, a certified public accountant, or CPA, can be beneficial when tax season comes around. You can have your tax return prepared in-house and take advantage of all sorts of write-offs and tax deductions from your business.
2. Leave It to Property Management
Similar to an accountant, you can also outsource your financial work with a property management firm. They can perform many of the same functions as an accountant.
Property management companies will also be able to advise on things like rental income management. Your real estate accounting may be just one part of a property management package.
3. Separate Bank Accounts
It may be tempting to put all of your money into one account, but this can be a major problem down the road. It can get especially thorny if you expand your property portfolio or get transactions mixed up.
Open up separate bank accounts to keep personal and business finances away from each other. If you need money, transfer it from one account to the other.
Separate bank accounts can be hugely advantageous when it comes to taxes. It will be much easier to sort out business versus personal expenses. You'll also experience less stress.
4. Evaluate Financial Statements
How do you master rental income management and make sure your business operates in the black? A simple answer: financial statements.
These are reports that show all aspects of your business, such as your net income and cash flows. If you have questions, ask your CPA or bookkeeper for further clarification.
5. Keep Accurate Records
When you manage a rental property, you need to save everything. Even if you don't think a document is important, you may need it later on.
To make this easier, try storing your documents in an online cloud storage space. You won't have to worry about losing key contracts or agreements. You can also access it from any device.
Simplify Your Rental Property Accounting Today
The idea of rental property accounting may seem mystifying, but it doesn't have to be. You can establish a real estate accounting strategy that works for you and ensures you have an accurate picture of your finances.
If you're a landlord in Sarasota, consider working with PMI Sarasota for your property management needs. We provide excellent real estate services to the Siesta Key, Longboat Key, and Sarasota areas.
Need a helping hand with your real estate accounting? Contact us today at PMI Sarasota to get started.
