Investing in San Antonio real estate was one of the best decisions you made, but you find yourself struggling with the business side of things.
You can't seem to keep up with bookkeeping and you don't know which rental investments are paying off. You're not alone. In fact, 60% of business owners feel they aren't knowledgeable when it comes to accounting.
Owning rental property is a business endeavor so it's important to follow rental property accounting best practices to stay afloat. Keep reading to learn them.
Maintain Detailed Records
Rental property accounting can turn messy if detailed records are not maintained. If you aren't a good record keeper, consider hiring a property manager or accountant to handle your finances.
Having detailed records regarding your rental property ensures nothing gets through the cracks. You'll be able to easily handle tenant disputes and identify tax deductions, among other financial matters.
Without proper records, you won't get a full picture of how your real estate investments are doing.
Separate Business and Personal Finances
Your rental property is a business and should be treated as such. It's important to draw the line between your personal finances and rental property finances so you don't end up with confusing financial statements.
Open a separate business bank account and dedicate it to your rental income and expenses. If you have multiple rental properties, consider having a different bank account for each of them to simplify the accounting process.
This separation provides you with a clear overview of your property's financial health while making filing taxes easier and simplifying bookkeeping.
Reconcile Bank Statements
This one is important. You must routinely take the time to reconcile your business bank account statements with your financial records. This way, you can make sure your transactions are accurate and identify any errors.
This may seem like a tedious task to complete if you are just starting, but you'll get used to it and realize how beneficial it is to your records.
Pro tip: Avoid getting behind on reconciliation to avoid having too much on your plate at once. A good practice is to reconcile bank statements weekly or monthly depending on how many transactions you have.
Consult With a Professional
Don't feel like you have to do everything on your own. Consider hiring a rental property management company that can take care of accounting and other responsibilities.
The best property managers are familiar with rental property software and can automate a lot of time-consuming tasks for you.
Property management software makes it easy to track rental income and expenses. You'll also be able to note whether or not tenant payments were made on time.
Handle Rental Property Accounting With Ease
Many investors turned landlords don't have experience with rental property accounting and other responsibilities that come with being a property owner.
Luckily, PMI San Antonio is here to help! Our expert property managers can maintain detailed records, separate your accounts, and regularly reconcile bank statements.
With over 20 years of experience in the San Antonio area, we know how to make property management manageable for landlords.
What are you waiting for? Contact us today to start making sense of your rental property accounting.
