Managing the finances of a property can be a daunting task, especially if you’re not familiar with bookkeeping. However, with the right tools and knowledge, you can keep your finances organized and ensure that your property is running smoothly. In this guide, we’ll cover everything you need to know about property management bookkeeping, from tracking expenses to creating financial reports. So, let’s get started!
Understand the Basics of Bookkeeping.
Before diving into property management bookkeeping, it’s important to understand the basics of bookkeeping in general. The act of recording and managing financial transactions, such as invoices and payments, is referred to as bookkeeping. This information is then used to create financial statements, such as balance sheets and income statements, which provide a snapshot of the financial health of a business or property. Understanding the basics of bookkeeping will help you better manage your property’s finances and make informed decisions.
Choose the Right Accounting Software.
Choosing the right accounting software is crucial for effective property management bookkeeping. Look for software that is specifically designed for property management, as it will have features tailored to your needs. Some key features to look for include the ability to track rent payments, generate invoices, and manage expenses. Make sure the software is user-friendly and offers good customer support, as you will likely need assistance at some point. Consider factors such as cost, scalability, and integration with other tools you use. With the right accounting software, you can streamline your bookkeeping and stay on top of your property’s finances.
Set Up Your Chart of Accounts.
One of the first steps in property management bookkeeping is setting up your chart of accounts. This is essentially a list of all the accounts you will use to track your income and expenses. It’s important to set up your chart of accounts correctly from the beginning, as it will make it easier to track your finances and generate reports later on. Some common accounts to include in your chart of accounts for property management include rent income, maintenance expenses, property taxes, and insurance. Make sure to consult with a financial professional or accountant to ensure your chart of accounts is set up correctly.
Track Income and Expenses.
Keeping track of your income and expenses is crucial in property management bookkeeping. By doing so, you’ll be able to comprehend your cash flow and make wise financial opinions. Use a software program or spreadsheet to record all income and expenses related to your properties. Be sure to categorize each transaction correctly based on your chart of accounts. Regularly review your financial statements to ensure accuracy and identify any areas where you can cut costs or increase revenue.
Reconcile Your Accounts Regularly.
One of the most important tasks in property management bookkeeping is reconciling your accounts regularly. This means comparing your recorded transactions to your bank statements to ensure that everything matches up. Any differences should be looked into and fixed right away. Reconciling your accounts on a monthly basis will help you catch errors early and ensure that your financial records are accurate. It will also make tax time much easier and less stressful.
Why Velan Bookkeeping Services?
Velan bookkeeping with its 16 years of experience as an outsourced bookkeeping services provider, offers Cloud Accounting and Bookkeeping, AR/AP, Payroll, and Controller services for various industry verticals. We cater to all types of clients, right from small businesses, CPA firms to Fortune 500 companies spread across the USA.