Are you a good landlord, but terrible with finances? Does looking at numbers feel confusing and frustrating?
You're certainly not alone. Many business owners don't have a head for numbers. This includes property managers and rental property owners.
If you're having trouble with your rental property accounting, read on for some practical tips so you can have better books.
Hire a Professional
Managing a property doesn't have to be a one-person job. It may be worth your time and money to outsource your accounting work.
A bookkeeper can take care of all of the accounting transactions for your rental property. He or she will be able to track payments, expenses, profit and loss, and liabilities.
Take it a step further and work with a property management company. They can handle your finances and conduct a rental analysis so that you can make as much money as possible.
Keep Accurate Accounting Records
If you don't have accurate records, you could be losing money without even knowing it. Worse, you could be liable for things like underpaid taxes or overdue invoices.
Make sure every transaction is recorded properly. Software like QuickBooks can help make the process easier. At the end of the month, reconcile your accounts and get a picture of your cash flow situation.
Track Payments Electronically
The saying used to be that cash is king. Nowadays, that couldn't be further from the truth. The best way to have permanent records at your fingertips is through electronic payment.
When you get new tenants, encourage them to use electronic payments. You can do this in one place with something like a payment portal, or accept banking apps and wire transfers.
Separate Bank Accounts
Never mix your business and your personal bank accounts. Even if your business is small or you only own one rental property, you need to keep all of your property information and financial records separate.
Managing a property requires its own set of financial obligations and tax issues. To make it easier come tax time, the separate accounts will allow you to file your personal and business returns.
Merging your personal and business finances also can't give you a clear picture of whether your real estate investment is successful.
Scale Mindfully
One of the best bookkeeping tips for landlords: Don't scale your property business without firm finances.
Consult with a property management company to evaluate your financial situation. They can help you determine if it's feasible to expand your portfolio.
For instance, if don't have enough to cover emergency expenses for every property, you should wait until you have more liquid capital.
Succeed at Rental Property Accounting
Money does not have to stress you out if you own a rental property. With good rental property accounting, you can know the state of your finances at any point in time.
Are you a landlord in the Coppell, Texas area? PMI Cowboys Realty is the partner you need for all of your rental property accounting and record-keeping.
Reach out to us today to get started.
