As a new real estate investor, you have a lot on your plate to worry about. There are many things to learn and do to succeed in this industry. One of the most important aspects of being a successful real estate investor is keeping good track of your finances. This can be daunting for new investors, but don’t worry – we’ve got you covered! Below are seven bookkeeping tips to help you stay organized and make informed financial decisions.
Choose the Right Accountant and Accounting Software
Real estate accounting can be very demanding and intricate. You need to make sure that you choose an accountant who is experienced in working with real estate investors and that you select accounting software that can accommodate your specific needs. Some of the excellent accounting skills you should look out for when picking your real estate accountant include:
- Extensive real estate knowledge
- The ability to deal with complex transactions
- An in-depth understanding of the tax code
- A knack for finding deductions and loopholes
- Tax planning
- Financial analysis
Once you’ve found a good accountant, they can help you choose the right accounting software. There are many different accounting software programs on the market, so it’s important to find one that fits your needs. You should also make sure that the software is compatible with your accountant’s software.
Track All of Your Expenses
Tracking your personal and business-related expenses is important for a novice real estate investor. This will help you understand where your money is and where it is coming from.
One way to track your expenses is to use a personal finance software program like Mint or Quicken. You can also use a spreadsheet to track your expenses. Either way, make sure you track all of your income and expenses to see where your money is going each month.
Another important tip is to keep all of your receipts and invoices in one place. This will make it easier for you to track your expenses and help you when it comes time to do your taxes. You can use a folder or envelope to store all your receipts or scan them and save them electronically.
Reconcile Your Accounts Monthly
One of the most important bookkeeping tips for new real estate investors is reconciling your accounts each month. This means that you will match your bank statements with your records to ensure that everything is at par. This is a crucial step in keeping accurate records and will help you catch any errors or discrepancies.
Unlike the past few years, reconciling accounts is much easier today. You no longer need to enter transaction details into a ledger manually. Instead, you can download your bank statements and transactions into accounting software like QuickBooks or Xero.
This will save you a ton of time and energy, which you can reinvest into your real estate business. You’ll also minimize the chances for errors, as the software will do most of the heavy lifting for you.
Use Technology to Your Advantage
When it comes to bookkeeping, technology is your friend. There are several apps and software programs that can make your life much easier, as we’ve already mentioned above. You can also integrate your accounting software with other technologies like electronic point of sale, marketing software, or other accounting software.
But technology doesn’t start and end in bookkeeping software and apps. You can use new technology like VR to tack sales to help your bookkeeping endeavors in the real estate industry. You can also choose to go paperless and store your receipts electronically. If you choose to go this route, make sure you have a backup plan in place if your computer crashes or is lost or stolen.
Utilizing the latest and greatest technology can make your bookkeeping process more streamlined. So don’t be afraid to try new things and experiment a bit – it could make your life a lot easier in the long run.
Outsource When You Can
If you’re not particularly good with numbers or don’t have the time to devote to bookkeeping, you may want to consider outsourcing this task.
Plenty of bookkeeping and accounting firms would be more than happy to take on your real estate business’ finances. And in many cases, it can end up being quite cost-effective.
So if you’re not confident in your bookkeeping abilities, don’t be afraid to seek professional help. It could save you a lot of time and stress in the long run as you concentrate on other key aspects of your business.
Learn About Real Estate Bookkeeping Trends in Your Area
Learning about bookkeeping trends in your area can help you get ahead of financial hitches right in time before they happen. Whether it’s a specific way of filing taxes or managing employee records, every region has a unique way they handle things. By following these trends, you can be sure that you’re keeping up with the latest changes and requirements to adjust accordingly and stay ahead of the competition.
Following these trends is also important if you’re operating in multiple states or jurisdictions, as bookkeeping standards vary from place to place.
Optimize Income and Revenue
One of the most important things you can do as a real estate investor is to optimize your income and revenue. This means looking for ways to increase the rent you’re bringing in while also minimizing expenses.
To do this, it’s important to keep a close eye on your bookkeeping and make sure that everything is being accurately recorded. You may also want to consider hiring a professional property manager to help you keep track of everything, including reducing tenant turnover rates and ensuring that your property runs smoothly. Optimizing income and revenue will eventually lead to a smooth bookkeeping process.
There you have it – seven bookkeeping tips for new real estate investors. By following these tips, you can stay on top of your bookkeeping and ensure that your real estate investing business runs smoothly. With accurate records and a well-run operation, you’ll be able to succeed in the long run. A good bookkeeping strategy will go a long way in helping you achieve your real estate investing goals.
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