Second only to finding the right tenants, accounting is one of the most important aspects of being a landlord or property manager. But it doesn’t have to be difficult or time-consuming. With the right accounting system in place, you can streamline your accounting process and save yourself a lot of time and hassle.
Here are 10 of the many important things that property managers and landlords should know about rental property accounting:
1. Understand the accounting basics specific to rental properties. This includes knowing how to track rental income and expenses, as well as capital improvements.
2. Have a strong accounting system in place from the start. This will save you a lot of time and headache down the road.
3. Keep meticulous records of all income and expenses associated with each rental property. This will come in handy come tax time.
4. Know how to properly depreciate your rental properties for tax purposes. This can save you a significant amount of money over the long run.
5. Understand the different tax deductions that are available for rental property owners, and make sure to take advantage of them come tax time.
6. Stay up to date on the latest accounting software specifically designed for rental properties. This will make your accounting process much easier and more efficient.
7. Have a clear understanding of your cash flow situation at all times. This will help you make smart decisions about how to best use your money.
8. Always keep an emergency fund set aside specifically for rental property repairs and maintenance. This will help you avoid financial disaster if something goes wrong.
9. Understand the importance of maintaining accurate records when it comes to insurance claims and other legal matters. This can save you a lot of time and hassle down the road.
10. Have a solid plan in place for what to do with rental property income, including how to reinvest it back into the property. This will help you maximize your profits and grow your rental portfolio over time.
Accounting for rental property doesn’t have to be stressful or difficult. With a little bit of knowledge and the right accounting system in place, you can streamline the process and save yourself a lot of time and hassle.
Basic Property Management offers free information and advice on rental property accounting, along with tips, tools and techniques for property managers and landlords who want to learn more about accounting for their rental properties.
So whether you’re just getting started in the world of rental property accounting, or you’re looking for ways to make your accounting process more efficient, Basic Property Management is here to help.