Interacting with your tenants and assisting with repairs might be things you enjoy doing. But the rental property accounting might be your stumbling block.
Accounting isn't something most people consider fun. Yet, it's a critical part of every business, including a rental property business.
Fortunately, your accounting doesn't have to be a treacherous task. You can manage it well and thoroughly with just a few simple tips.
Continue reading to learn five helpful accounting tips for your rental property business.
1. Avoid Mixing Personal and Business
The number one accounting rule when running a business is to keep your personal money distinct from your business money.
Combining these will only cause problems and confusion. It could even result in missing some expenses on your business records.
The simplest way to do this is to use a business account for all your rental income and expenses.
2. Use Categories
Next, categorize your expenses. The prime purpose of this step is to know where your money goes. You can create a list of landlord accounts for this purpose, which might include:
- Utilities
- Repairs
- Maintenance
- Insurance
- Landscaping
- Office
When you spend money, mark it in the appropriate category. This process lets you track your spending for budgeting and tax purposes.
3. Automate Your Systems
Most landlords want simplified accounting, so many turn to automation. You can automate numerous parts of your business, and one option is by offering a tenant portal.
A tenant portal gives your tenants a way to pay their rent electronically. When doing this, the rent money goes straight to your bank account.
Secondly, use accounting software. You may even be able to connect your portal to your software to simplify your bookkeeping further.
4. Print Reports
When automating your systems, you can print reports relating to your rental records. These reports can reveal many things, including:
- Income for a period
- Amounts spent on expenses
- Rental vacancy rates
- Increases or decreases in income
- Net income
An automated system provides the information you need for budgeting. You can review the reports to find ways to improve your business.
You can also use them to print financial statements. Financial statements are excellent tools to help you budget and forecast.
5. Hire It Out
Finally, consider hiring a property management firm for help. As a landlord, you probably have a busy schedule. You may not have the time or knowledge to handle every aspect of your business.
This is when a property manager can help. You can hire them to do the tasks you don't want to do, including rental property accounting.
Learn More About Rental Property Accounting Services
Rental property accounting records your income and expenses. You need this information to budget, forecast, and prepare your taxes.
Do you need some assistance? We can help.
Sunnyside Properties has the experience you need in a property management firm. Our firm is family-owned and operates in the Orlando area.
Our attention to detail provides an unparalleled experience for rental property owners. Get in touch with us to discover how we can help.
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