Accounting is the language of numbers, but sometimes it can be difficult to demystify. However, keeping track of your finances is vital if you're a real estate investor or rental property owner.
Are you a landlord in Coeur d'Alene, Idaho? If so, you may be wondering how best to crunch the numbers for your rental property. Here are four strategies to try so you can see how much money you're bringing in.
1. Always Use Separate Accounts
A good rule of thumb for any business or property owner is to use separate accounts. Allowing your personal and business finances to comingle is a recipe for disaster, especially come tax season.
This doesn't just apply to bank accounts. Use separate credit cards for business and personal expenses as well.
2. Digitize Your Finances
You don't want to deal with papers all over the place when you try to maintain accurate accounting records. Digitize everything so you have permanent records and you can cut out all the paperwork.
QuickBooks is a popular digital accounting software. You can do everything from keeping track of bills to recording tenant payments.
Having a digital record also means you can access your numbers from anywhere. It's helpful to be able to pull up your accounting on a phone screen or a tablet if you need to check something on the go.
3. Have an Emergency Fund
An emergency fund is important in case you have unexpected expenses for your rental property. You should always be able to pay for things like repairs and maintenance without issues.
To make money and keep your funds safe, put the emergency fund into a high-yield savings account. It will accumulate much more interest than your checking account and the money is still easily accessible.
Have at least enough money for major repairs, and build it up over time if necessary. You never want to be caught in a place where you can't afford to fix your property.
4. Work With a Third Party
Sometimes bringing in the experts is the best solution for your accounting strategy. For instance, a property management company can handle a lot of the day-to-day tasks for you if you don't want to be hands-on with your rental property bookkeeping.
If your accounting gets too complex, it may be time to work with an accountant or bookkeeper. This person will be able to log all of your accounting records and reconcile your accounts to make sure everything is in order. They will also be able to show you things like profit and loss.
Master Rental Property Accounting Today
Although rental property accounting can seem like a chore, it doesn't have to be. Use these tips and tricks to stay on top of your books and keep accurate accounting records.
PMO Coeur d'Alene is the perfect choice for your property management needs. With the right combination of experience and industry knowledge, we can help you with all of your property accounting needs.
Ready to get started? Reach out to us today to begin your property management journey in time for tax season.
