Accounting Tip for Real Estate Owners
Updated: Jul 13
Accounting is a vital part of business, especially when it comes to real estate. However, it's unfortunate that most investors usually forget to incorporate accounting into their business; therefore losses occur. So, if you're in real estate and own properties that you use for long term rentals, then you want to know about this simple trick that will save a lot of time and money! This is something we require all of our real estate clients to do because it's so simple.
The Tip for Real Estate Owners
If you have multiple properties, make sure that you have one bank account, specifically for each property. Take a look at the example below:
Let's say there are three properties. Each one should have its own bank account:
Property 1 - 123 Market Street Account
Property 2 - 432 Walnut Street Account
Property 3 - 983 Chestnut Street Account
Why Is This Important?
The reason it's so important is that it makes accounting so much cleaner and easier to manage. So we know that if anything hits the first bank account, we know it belongs to Property 1 (123 Market Street Account). If anything hits bank account 3, we know it belongs to Property 3 (983 Chestnut Street Account). Now imagine if you only had one bank account and three properties. It's not going to take you really long to get confused and forget what's what.
Another reason why this is so important is taxes. If you don't have your books really tight and really clean, you can have money slip between the cracks. Make sure to use this tip!
3. Save Time & Headaches
Lastly, the reason this is important is that it will save you a lot of time and headaches. That way you don't always have to wonder if you made a mistake or forgot something.
So the question is, do you have an Accountant managing your books? Proper accounting for real estate is key. You don't want to miss tax breaks that you could be eligible for if you don't have a professional handling the books. If you want to handle the books on your own, then you can do so with this helpful Real Estate Online Training Course in QuickBooks Online. This tutorial walks you through everything step by step. Check it out if you want to handle the accounting for your properties.