Rental property income and expense tracking? You didn't sign up for this. You signed up to be a landlord to make passive income and possibly generate wealth over time.
Whether you like it or not, rental property accounting is necessary to your end goal. If you don't know how to keep accurate records, this guide and property management companies can help.
If you are a landlord in Richmond, Virginia or the surrounding counties, keep reading to learn crucial accounting tips.
Treat Your Rental Like a Business
Some rental property owners fail to treat their properties like a business. Start by separating your business funds from your personal finances.
Opening a business bank account is key to rental property accounting. This way, you can keep track of business transactions to help you during tax season. Plus, you'll always have a good idea of your property's performance.
Use your new account for all property rental income and expenses. If the IRS audits you, you'll have your information in one place.
Use Accounting Software
Accounting software is the easiest way to set up your new system. Find a system that works for you so you can get everything running smoothly right away.
These are some of the top features landlords look for in a software program:
- Income and expense tracking
- Cloud-based usage
- Bank account reconciliation
- Financial report generation
- Mobile app usage
Hiring a property management company means having a professional property manager take over your finances. They will utilize accounting software as manual accounting is outdated.
If you want to protect your real estate investment, going digital is the way. This will considerably cut down on the possibility of manual or human errors in your accounting system.
Regularly Track Income and Expenses
Earning passive income won't happen if your income and expenses aren't in order. Don't wait until the end of the year to reconcile your accounts.
Tracking income and expenses monthly is common, however, depending on your preferences, tracking finances quarterly may also be doable for you.
The great thing about property ownership is that many of your income sources and expenses are reoccurring.
Most of your income will be from rent payments. Many of your expenses will be for maintenance and property management fees.
Regular tracking may sound like a tedious task, but can you imagine if you let it pile up to handle all at once?! Avoid this stress by tracking your property funds regularly.
Need Help With Rental Property Accounting?
Rental property accounting isn't for everybody. However, you can't be a successful real estate owner without accurate records.
Using these tips, you'll have the basics of an accounting system started. We can help with the rest!
Renters Warehouse offers comprehensive financial reporting to help Richmond-area landlords keep tabs on their investments. We track financials and report the information to you each month. And we supply a comprehensive report at years end for your tax reporting purposes.
We use a web-based accounting system and offer detailed financial reporting tools. You can track your investment online 24/7.
Since 2015, we've been helping landlords like you. Contact us today to learn more about our services.
