Starting a rental business in Hammond, IN means watching your expenses carefully. Outsourcing rental property accounting for tasks like regular bookkeeping or tax prep could cost $150 to $400 per hour, which is steep when you're new to the market.
Managing your finances might not seem ideal, but with the right guidance, you can do it well. Good accounting helps you monitor your rental property's financial health.
These tips will guide you to keep your books tidy and your business prosperous. Continue reading for essential advice that can help you manage money better.
Separate Business Finances
Keeping your accounting records in order starts with separate bank accounts. One should be for your personal use and another for your rental properties.
For example, you can put security deposits in a different account from your savings. This way, all your business transactions will be in one place.
It keeps your records neat and makes tracking easier. If the IRS checks, they'll only see business transactions. This makes it simple for them to audit your tax forms.
Optimize Your Rental Property Accounting Records
Use spreadsheets to document your income and expenses. Creating obvious categories for overheads helps you during tax season.
Include mortgage rates since they are a major expense and tax deductible. Also, list property taxes paid on your rental as a key category. Don't forget to add insurance costs, like property and liability insurance, since these are deductible too.
Accounting software, such as Quickbooks, can help organize receipts for you. This makes managing your finance documents much simpler.
Employ Technology
Rental property management software can reconcile bank transactions for your properties. This beats doing it by hand. The software matches transactions automatically.
This method is faster and more accurate. It may also help you claim more tax deductions.
Popular options include:
Landlord Studio
Buildium
Rent Manager
Xero
FreshBooks
When selecting accounting software, look for one that tracks rent payments, expenses, and tenant details. Make sure it's easy to use and works with your devices. This way, your accounting data is easy to access.
Also, check if the software can grow with your rental business and offers good customer support. Help should be available when you need it.
Simplify Rent Collection
Landlords should make rent collection easy to ensure they maximize their ROI. Using online payments can help because they're automatic. This gives landlords a steady stream of income to count on for their expenses.
Online portals are a great way for landlords to collect rent. These platforms handle payments from one screen.
Landlords get details like who's paid up and who hasn't. The system even tracks expenses and makes reports.
Hire a Property Manager
To master your rental property accounting, keep personal and business finances separate. Opt for technology and software to handle transactions and streamline paperwork. Easy rental collection methods will help maintain a steady cash flow.
And if you'd rather have an expert handle it, consider hiring a property manager. For those in and around Hammond, IN, PMI NWI is here to assist you. With over 20 years in the industry, we have the experience to ensure your accounts are seamless.
Call us today and let us manage your accounting while you enjoy the rewards of your investment.
