What is the first thing that comes into your head when you think of accounting? You may imagine complex financial statements, long lists of numbers, or a lot of paperwork.
However, if you're a landlord, you need to conduct rental property accounting. You must have an accurate picture of your finances at any given time.
So, how do you keep track of your business expenses and other financial records? Here are some key tips to implement into your property management strategy today.
Separate Accounts
Even if you own one property, you need to keep your personal and business accounts separate. This is much easier in the long run because you can see which profits and expenses go toward your property, versus your personal income.
If you are a new or accidental landlord, go to the bank and set up a business account immediately. Route all of your rental income and expenses to that account only.
Once you decide how you want to pay yourself every month, you can transfer funds from your business account to your personal bank account.
Use Rental Property Accounting Software
Accounting software can save you a lot of time and money when it comes to rental property accounting. In addition to tracking your records, it can also provide financial reporting and analysis.
For instance, if you want to see your net income for a certain period, you can toggle that option within the accounting software.
A bookkeeper or CPA can more easily assess your financial situation if you have accounting software, rather than paper or spreadsheet records.
Hire a Professional
Sometimes it is best to leave it to the experts when it comes to your financial situation. For a small property rental business, a bookkeeper will usually be able to handle all of your transactions.
For more in-depth accounting and financial advice, you may want to work with a property management company or a CPA (certified public accountant).
Track Business Expenses
Keep a thorough record of every expense you have for your rental property. Not only will this lead to more accurate accounting, but it will save you a lot of money when tax time comes around.
File Documents
You need a system for all of your rental property accounting records. A physical file cabinet is a good idea if you want hard copies, but it is better to have a cloud copy available.
If you have a natural disaster or your physical records are destroyed, you can always revert to the digital copy.
Master Your Rental Property Accounting
You should not have to worry about your rental property accounting if you're a landlord. With this guide, you can ensure you have accurate financial records and you're always aware of your monetary position.
If you're a property owner in Montgomery, Alabama, consider working with PMI River Region. You can trust our experts to take care of all of your property management needs.
Ready to get started? Take a look around our website and reach out to us today.
