Rental Property Accounting & Bookkeeping Tips

The Plus tier stands out for accounting because the advanced performance insights and revenue management take the strong bookkeeping tools to the next level of business growth. Landlords can keep track of rental property expenses through receipts, rent rolls, and spreadsheets, or they can trust Apartments.com to track their expenses. Reconciling your rental accounts on a regular basis is an important part of being a responsible real estate investor.

This form will keep you compliant with IRS standards, as well as give you a formal place to report your income and expenses for the year. It is recommended that you get a working knowledge of applicable tax forms as soon as you start your business. Doing so will make rental property bookkeeping a lot easier and more accurate.

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You can see your profit and loss, cash flow, and net worth all in one convenient app. There are different types of income and expense transactions, and each transaction can be tied to a tenant, a property, or your business. Understanding how each transaction relates to different areas of your business will help you properly maintain your accounting records.

Good record keeping can also help you keep tabs on your rental property’s performance over time, which can be helpful in making future decisions about improvements or repairs. Additionally, should you ever need to evict rental property bookkeeping a tenant, having accurate records of rental payments made (or not made) can be crucial in proving your case in court. If you’re a landlord with poor bookkeeping practices, you could face some serious consequences.

Tips To Simplify Your Rental Property Accounting

For the novice investor, rental property accounting might seem as simple as tracking rent payments (income) and property maintenance and taxes (expenses). But the seasoned investor, landlord, and property manager can tell you that there are a few more areas to pay attention to when it comes to good bookkeeping and accounting. Accurate accounting seems like one of the fundamental parts of the landlording business.

Finally, some landlords fail to keep accurate records of rent payments made by tenants. This can create headaches if there’s ever a dispute over late or unpaid rent. Accounting software for rental properties captures day-to-day income and expenses while enabling users to run insightful reports to help them scale their business. The software saves landlords hours, if not days hunting for receipts to assemble their tax returns at the end of the year. To avoid these common mistakes, be sure to keep meticulous records of all income and expenses related to your rental properties.

Learn taxes

Check with your accountant for the best practice, then be consistent with how you treat the expense each year you file Schedule E on your 1040 tax return. Even if you use an accountant or CPA to file your year-end tax returns, it’s still a good idea to know what the basic tax forms look like and what they’re used for. Landscaping costs may be higher in the summer, but next to nothing in the winter. Or, you may need to install a new HVAC unit next year, so you can set aside a small percentage of your rental income each month to fund a CapEx (capital expenditure) account. Online rent collection is fast, secure, and reduces the chance of late and missed rent payments.

If the idea of managing your accounts by hand intimidates you, consider an accounting system like Xero Online Accounting, Sage 300, or Intact – all highly recommended by other real estate investors. By law, it is required that businesses keep up-to-date and standardized records of all money going in and out of their company. Online bookkeeping keeps a more accurate track of daily expenses so that you have one less thing to worry about – similarly to the way a virtual assistant would be helpful. The easiest and most effective way to manage this step is to find a purpose-built software.

Verify the figures are correct, then use your findings to plan your budget for the following month. Repeat this process monthly, review your total earnings and spending quarterly, and report your income annually during tax season. After a year, reference your records to determine how much you should charge in rent, save, and budget for the following year.