According to a post by Wix, 10.6 million people in the United States generate income from rental properties.
If you're one of these people, you may need to learn how to track your property's income and expenses. Proper records can help with financial management and filing taxes. You can project rental income to decide when to get a loan.
Read on to uncover effective strategies for rental property accounting in Boulder, CO.
Separate Personal and Rental Property Finances
One of the worst mistakes landlords make is mixing personal and investment property finances. They assume that they don't have to since separating the two is not a legal requirement. Sadly, most of them struggle to track their rental income and expenditures.
They often use personal money without realizing it for property maintenance and repairs. Avoid this mistake by opening a separate bank account for your rental income. Ensure the account has its own credit or debit card.
Utilize Rental Property Accounting Software
Accounting software for landlords can help you avoid the hassles of manual bookkeeping. The tool can also boost accuracy, helping you track income and expenses effectively. Compare different software solutions to decide on the right one.
Prioritize the one with a user-friendly interface to expedite the learning process. Get the software from a provider offering reliable customer support.
Stay Organized with Proper Recordkeeping
As a landlord, you need to develop an effective system for tracking and storing finances and documents. You must ensure timely rental income tracking to avoid problems when filing your taxes. Also, properly maintain lease agreements, receipts for repairs, and tenant correspondence.
Proper real estate bookkeeping can help you make informed financial decisions. You'll have data to support your decision to get a loan to invest in another rental property. Besides, the records can serve as evidence in case of an audit by the tax authority (IRS).
Hire a Professional Accountant or Property Manager
Property management accounting can be overwhelming, especially if you lack the necessary expertise. You're likely to make fatal mistakes that can mess up your finances. You may assume you can afford a renovation project only by spending all your cash reserves.
Seeking professional help from a property manager or accountant can mitigate this risk. The expert can share easy-to-implement real estate bookkeeping strategies. They can guide you on common financial mistakes landlords make and how to avoid them.
On top of helping with finances, a property manager can assist with tenant screening and property inspection. They can also help you advertise vacant units, attracting new tenants quickly and boosting your rental income.
Outsource Rental Property Accounting to a Professional Firm
Keeping track of your rental properties' income and expenses can be time-consuming and overwhelming.
PMI Flatirons Group can help you overcome this struggle. Our property managers are well-trained and professional.
They can help you maintain up-to-date rental income records you can rely on when filing taxes. They can advise you on ways you can increase your rental income.
Get in touch today to learn more about how we can help with rental property accounting!
