Austin is a lucrative market for any real estate investing portfolio. What does this mean, though, and is there any way to make it easy on yourself?
Below, we explore five of the most useful pieces of advice when it comes to handling your accounts. As you read them, consider how you currently process your financial records and whether you might need a little help getting them in order.
1. Comprehensive Documentation
As you transfer money for rental leasing, ensure you document each time it changes hands. If you deal in cash, this is even more important, as these kinds of records can ensure you can prove your actions during an audit.
When you pay expenses of any kind, also ensure you keep any receipts, invoices, or other documentation. If this is overwhelming in paper form, transfer it to digital records instead.
2. Use Separate Accounts
Make sure that you do not use your business account for personal expenses, or vice versa. If you do, it can be hard to prove that many business expenses are not for personal use.
When you need to file a tax return, this separation will also make it much easier for you. It ensures you do not need to justify every expense or which incoming payment is from the homes you rent in as much detail.
3. Reconcile Monthly
Getting behind in your finances can bog you down. Make sure to perform a simple reconciliation every month, to keep things up-to-date. If anyone ever wants to look at your accounts, this will also mean they are not too far behind, meaning you can present high-quality and relevant data.
For your own benefit, it also means you can see trends in your accounts much easier.
4. Work With Professionals
Try consulting with financial professionals to give you the best advice possible. You may even want to work with a group of high-quality property managers who can get your financials in order. This takes a lot of the weight off of your shoulders.
Such a group will also be able to handle many other aspects of renting you might want to hand off, for example, tenant screening or maintenance.
5. Use Tailored Software
Accounting software designed for rental properties will already be set up with all the data and categories you need to have good records. The best way to do this is to use a cloud-based platform, allowing you to update it wherever you are, including uploading receipts as soon as you get them.
Help With Rental Property Accounting
As your portfolio grows, so too do your responsibilities when it comes to keeping your books in order. Failing to do this may even cause you to be liable for fines or even greater consequences. This is why having someone who can handle your rental property accounting might be of great benefit.
We work with property managers such as yourself to ensure the work they do benefits them without demanding more of their time. So, talk to us to learn what we do and how it can mean a less stressful portfolio for you moving forward.
