Do you constantly find yourself worrying about your rental property finances?
Are you a San Diego landlord who doesn't know if you can expand your real estate portfolio?
Do you wonder how you can accurately track things like rental payments and security deposits?
If so, you may need to do a better job with your rental property accounting. Read on to learn about the benefits of keeping good financial records for your real estate business.
1. Use Accounting Software
Almost two-thirds of small businesses rely on some form of accounting software to keep their books organized. This technology has skyrocketed over the past few decades and become more accessible for regular people.
Try a course for software like QuickBooks to see if it's a fit for your business. It may take some practice, but it will feel empowering to know where your money goes.
2. Hire a Professional
If you have many properties or you don't want to do your real estate accounting, a professional bookkeeper is a great solution. Many bookkeepers do freelance work, so you can hire them for a few hours a month to reconcile and close the books.
Take it further and consider working with a CPA, or certified public accountant. They can do your accounting but with the benefit of working on your tax return.
3. Evaluate Finances Regularly
You should never leave financial decisions up to chance when you're a rental property owner. Look at the numbers regularly to see if there is anything you should change.
For instance, you may find yourself losing tenants and spending more to replace them. This indicates a leasing management problem.
4. Know the Tax Laws
When you are a real estate investor, it is important to know tax and property laws in your area. Otherwise, you may end up paying fines or penalties.
If you work with a CPA, they can help you successfully navigate tax season and avoid paying more than you have to.
5. Separate Work and Personal Finances
It may seem like the ideal solution to have your rental income deposited directly into your personal checking account. However, that couldn't be further from the truth.
Merging your business and personal finances is never a good idea. This can create confusion and more liability during tax season. It also doesn't give you an accurate picture of your business cash flow.
Open a separate account for your business matters. When you need to pay yourself, transfer the money to your checking account.
Use These Rental Property Accounting Tips Today
Do you want to bring your landlord business to the next level as a rental property owner? The first step is to ensure that your money is in order so you have an accurate picture of your financial position.
If you want help with your real estate accounting in the San Diego area, Income Property Advisors is the perfect choice for your property management needs.
Our team can help you with real estate accounting and accounting strategies so you are a financial success. Reach out to us today for more details.
