Most landlords face stumbling blocks occasionally when handling their duties. You might have to deal with a bad tenant or an emergency problem. These are normal issues that arise with rental properties.
However, for some landlords, the rental property accounting is their biggest stumbling block. Can you relate?
Handling rental property accounting is a critical duty of your Austin, TX, business. Therefore, you must work on it, but could you use some help?
Here are several excellent tips that can help you manage your bookkeeping tasks.
Open a Rental Property Banking Account
You can open various types of bank accounts, and you'll need at least one for your business. You need a business account for all your business transactions.
Having a separate account helps you stick to one vital principle: Keep your business finances separate from your personal.
You'll use this separate account to make your rental income deposits and pay your rental property expenses. It provides a separate place for every business transaction.
You might also want to open another account to use for your security deposits. Keeping these separate protects the money and helps you avoid spending it.
Track Every Penny
One of the most vital things you can do for your accounting is to track every penny. Every time you receive rent money, deposit it. Every time you pay a bill, record it.
You will pay taxes on your rental property business income. Fortunately, you can reduce your taxable income by subtracting your business expenses. You must record all your expenses to reap the best results.
Additionally, recording your expenses in categories is also helpful. For example, separate your expenses into categories, such as:
- Utilities
- Screening costs
- Maintenance
- Repairs
- Updates
Having categories is helpful for seeing where you spent your money. You can use this information to create a budget for next year. You can also use it to find ways to cut your costs.
Use Rental Property Accounting Software
Finally, invest in rental property software. This software helps you prepare for your rental property taxes. It helps you budget and analyze your finances.
You can use it to record all your income and expenses. You can also use it to create reports or to print forms, such as 1099 forms.
Accounting software lets you store your information electronically. Without it, you must record your transactions on paper.
You can also hire a property management firm to take over these duties. If so, they will provide the accounting software and handle every accounting duty your business has.
Consider Outsourcing Your Bookkeeping
Rental property accounting requires work and time. You must be able to work with numbers. Good accounting records are vital for many purposes, including for evaluating your finances.
Therefore, accounting is vital. The good news is you don't have to do it alone.
Monte Davis Property Management Service provides excellent services in Austin, TX. We specialize in managing single-family rental properties but have experience with all property types.
You can trust us with your properties and their duties. Reach out to learn more.
