Numbers come easy to some people which is why we have accountants. Although rental property owners definitely care about the numbers, they might not come easy to them.
If you are lost when it comes to rental property accounting, some basic tips can help. Orlando, Florida landlords can use this guide to ensure accurate record keeping.
1. Separate Personal and Business Accounts
The first rule of rental property accounting is to separate personal and business accounts. Open a business checking and savings account for each of your rental properties. Applying for and using business credit cards is also helpful.
Separating accounts ensures your business expenses don't mix with your personal finances. A problem that could affect how you do your taxes.
Avoiding commingling will make your life as an owner much easier. When you need to prepare financial statements, you'll be able to easily see where your income and expenses are coming from.
2. Set Up an Expense Tracking System
There is no one-size-fits-all approach to setting up an expense tracking system. You'll have to find what makes sense to you when calculating property expenses.
Some business owners choose to create their own expense worksheets. Electing to use rental property software is also a popular method for Orlando, Florida landlords.
Accounting isn't everyone's thing. You can outsource this task to a professional property manager who has accounting experience.
3. Go Digital
Even if you want to keep all your receipts, it's still a best practice to digitize them. Business owners should go digital for all things related to rental property bookkeeping.
Using scanning applications to digitize receipts and invoices is a manual method of going digital. A better option is to invest in accounting software to integrate file storage, financial analysis, and bookkeeping in one place.
Digitization can declutter the office and keep you on top of property income and expenses.
4. Prepare in Advance
Good record-keeping is done ahead of time. This way, you can use your past data to forecast future expenses.
Disciplined landlords set aside a portion of rental income into savings each month. If you want to have an answer for fluctuating and unexpected expenditures, this is the right step to take.
Timely and efficient rent collection is important if you plan to have any savings.
Setting aside savings provides a safety net instead of derailing your finances. If you need to replace appliances or see an increase in maintenance costs, you'll be glad you saved some money.
Rental Property Accounting 101
Orlando, Florida landlords might not know enough about rental property accounting to successfully track income and expenses. These four tips can help you get started.
The best plan of action is to work with a property manager who knows the industry. PMI Property Alliance is a full-service property management company utilizing state-of-the-art technology for accounting and other services.
We can keep you informed on how your investments are doing in real time. You don't have to lift a finger. Contact us today to start benefiting from over 20 years of industry experience.
