For real estate investors and property managers, properly handling bookkeeping is essential for success. Accurate real estate accounting provides the visibility needed to make sound business decisions. This article looks at what real estate bookkeeping entails, its importance, fundamental principles to follow, and how outsourced assistance can prove beneficial.
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What is Real Estate Bookkeeping?
Real estate bookkeeping refers to tracking financial transactions related to rental properties and investments. This includes recording income and expenses, bank account reconciliations, managing rent rolls, producing monthly reports, and more.
Robust bookkeeping is crucial for gaining insights to maximize rental revenue, tax efficiency, and long-term returns. It’s also required to access financing for future acquisitions and property improvements.
Why is Bookkeeping Important for Real Estate Businesses?
There are several vital reasons why properly handling real estate bookkeeping is so important:
- Track Rental Income & Expenses – Record rent paid, maintenance & repairs, capital upgrades, etc.
- Simplify Tax Filing – Detailed records make filing returns a breeze.
- Build Credit worthiness – Solid financials help secure future financing.
- Identify New Opportunities – Analyze records to find chances to add value.
- Stay Compliant – Avoid penalties by settling taxes accurately and on time.
Put plainly, real estate bookkeeping provides the clarity needed to amplify success.
Advantages of Real Estate Bookkeeping
When executed consistently and accurately, real estate investors and property managers can realize gains like:
- Enhanced decision-making based on financial data
- Precise annual tax liability assessments
- Clear insights into asset profitability
- Fund access for purchases, construction, renovations
- Reduced risk of noncompliance and errors
Bookkeeping allows for more intelligent management.
Basic Principles to Follow in Real Estate Accounting
While every real estate company is unique, there are some universal accounting best practices to abide by:
- Record income when rent is paid and expenses when bills are due.
- Reconcile bank and credit accounts routinely.
- Track income, expenses, and profitability for each asset.
- Maintain rent rolls indicating what residents paid.
- Set processes for handling cash inflows/outflows accurately.
- Keep detailed records organized and accessible.
Adhering to approaches like these leads to orderly finances and easier reporting when needed.
How to Do Real Estate Bookkeeping
Very simply – with certified bookkeeping expert help! Real estate bookkeeping involves moving parts between tracking rental income and expenses, property renovations, tax planning, annual filings, and more.
Rather than attempting to handle it internally, most investors and landlords smartly outsource to specialists at firms like Profitjets for seamless bookkeeping support. This option is affordable (costing a fraction of an in-house resource) and provides unmatched quality and depth of expertise.
Profitjets real estate bookkeeping solutions include:
Custom onboarding – Ensure proper setup from day one.
Daily transaction entry – Detailed recording of all numbers.
Expense tracking – Bill pay options are available for convenience.
Client budgeting tools – Utilizing tools to help in a visual aid to your financial health
Monthly reports – Like clockwork for your monthly reports
Annual taxes – All taxes are taken care of by our regulation experts
Let Profitjets alleviate the bookkeeping burden so you can spend more time finding new opportunities.
Schedule a call today to discuss your property portfolio’s unique needs!
The Challenges of DIY Real Estate Bookkeeping
Many real estate investors and landlords first attempt handling bookkeeping using spreadsheets or software. But this DIY approach often leads to subpar outcomes due to:
- Data entry errors
- Inconsistent reconciliation
- Confusing income/expense classification
- Complex depreciation calculations
- Ever-changing compliance rules
Without proper oversight, bookkeeping errors and inefficiencies can multiply quickly. Before you know it, you’re facing disappointing returns, missed tax deductions, and compliance notices.
Advisory Services for Improved Financial Performance
An additional advantage of partnering with Profitjets for real estate accounting goes beyond basic bookkeeping – you gain insights and ideas from a team of financial advisors.
On an ongoing basis, your dedicated accountant will uncover ways to:
- Lower tax liability legally
- Access better financing rates
- Identify properties with the highest ROI
- Reduce expenses through better vendor negotiation.
These value-added services lead to expanded profit margins over the long run.
Special Pricing for Property Management Firms
For property management firms overseeing bookkeeping for multiple properties simultaneously, Profitjets offers streamlined solutions and discounted pricing.
- Services specially geared towards PMs include:
- Consolidated reporting across properties
- Customized workflows to your specifications
- Volume discounts as more units get added
- Fast turnaround on new property setup & acquisition
By centralizing bookkeeping under the managed services model with Profitjets, property management firms maximize productivity and cost efficiency across the board.
Reach out now to learn more about special pricing for those managing multiple properties!