Essential Bookkeeping Tips for Real Estate Investors

Essential Bookkeeping Tips for Real Estate Investors

One of the main issues that come along with conducting business is ensuring that you keep your books in order. Not only does this ensure you're prepared for tax season, but it also helps you keep track of the incoming and outgoing cash flow when investing in real estate.

If you're new to property management, you've come to the right place. We've got some essential bookkeeping tips below to help you maximize your real estate portfolio correctly.

Have a Designated Business Account

Before you begin investing in real estate, one of the first things you need to do is ensure you open a business account separate from your bank account. This will make it easier for you to separate your personal and business cash flow.

It also helps you understand your total expenses for the business. By doing this, you can ensure your personal assets are protected, and it saves you time in the long run.

Depending on the bookkeeping software you use for your properties, you'll be able to track the expenses for each property. This is useful when reviewing data for specific properties without spending time sifting through individual transactions.

Don't Throw Away Receipts

Whenever you buy something, one of the most common things to do after is to throw away the receipt. However, when you run a business, it's crucial that you file away receipts just in case you need to review them in the future.

Because bookkeeping has become advanced, you can scan the receipts into the system. When you need to find one, it's easier to go back digitally and find the specific receipt you're looking for based on several filters, such as the date or the property.

When scanning the receipt into the system, provide as much information as possible. This information could include things like:

  • The property the receipt is for
  • Date of the receipt
  • Purpose of the receipt

Another reason to keep receipts is that it's a requirement imposed by the IRS.

Review Accounts Routinely

After you've input information into your account, you need to review and reconcile your accounts regularly. The reason to review this is to ensure that the data you've entered is correct.

When there is incorrect information entered, it can cause your books to become unbalanced, which creates more of a hassle trying to get everything corrected and searching for where the issue occurred in the system.

Bookkeeping Tips for Real Estate Investors

If you're joining the growing industry of real estate investors, you will want to take advantage of these bookkeeping tips. Ensure you create an account separate from your personal and review all accounts to keep them balanced.

For more resources to help you become better at property management, contact Home River Group for more help. Trust us, your property tenants will thank you when you take advantage of all our website has to offer.

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