Tips for Rental Property Accounting Records

Tips for Rental Property Accounting Records

Do you know how much of your rental profit slips through the cracks because of missed deductions, unpaid rent, or unexpected expenses? In the rental business, keeping good records is as crucial as keeping good tenants. Good rental property accounting can save you money and hassles, especially around tax season.

Maintaining accurate records boils down to a few key practices that most property owners will find accessible. Read on to learn a few straightforward strategies to simplify landlord accounting.

Use a Separate Business Bank Account

Keeping your business and personal funds separate is a significant step you can take toward simplifying your accounting process.

You'll start each accounting period without the confusion of separating business transactions from personal ones. This gives you an easy start to your accounting process.

You'll start by downloading or printing your business account's bank statement. Next, look for the supporting document(s) that correspond with each transaction. This single technique dramatically simplifies the following:

  • Tracking property expenses accurately
  • Filing and calculating taxes efficiently
  • Rental income tracking

It also gives you an easy way to detect when a supporting document (e.g., receipt, invoice, tax statement, etc.) is missing. In NC, you already have to store security deposits in separate accounts; doing the same with the rest of your business funds is massively beneficial.

Adopt Better Ways to Organize Your Documents

Every document related to your rental business is essential for one or more of the following reasons:

  • Receipts, invoices, and contractor's contracts show cash inflows and outflows accurately
  • Contracts and leases are critical in lease enforcement and dispute resolution
  • Receipts and invoices are relevant for tax filing
  • You need to be able to produce all your supporting documents if you get audited

All of this means that you need a top-tier filing system. The first step is to get away from a paper-based system. Today, there are many technological options for landlords that make document management easy.

Specific property management accounting programs cater to the storage of documents in PDF format. Even if you get a hard copy of a document, use your phone's scanning app to capture it in your accounting software (or even Google Drive). Getting into this habit means that you'll never again lose important documents.

Use Property Management Accounting Software

Using software built for landlord financial management can make your accounting process even more efficient and accurate. Modern programs can track your income and expenses and flag problems as they arise.

Many platforms also cover tax reporting, including the ability to adapt to State-specific regulations. If integrating accounting software into your process seems daunting, consider hiring a property manager to help you find and implement the right program.

Find a Partner to Help With Rental Property Accounting

By implementing the right rental property accounting strategies, you could become incredibly effective in your accounting practices. However, landlords rarely have the time to properly develop these habits.

Partnering with a property manager can make it all simpler. At PMI All American, our expertise is backed by a nationwide network of property management experts. We specialize in financial reporting in the property management game.

Contact us today so that we can make accounting easier for you.

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