The phone keeps ringing, and your list of things to do keeps growing. This sounds like a typical day for a landlord, but the problem is you have other tasks to handle.
Will you have time to handle everything? Many landlords experience this problem every week, leaving them unable to complete every task. Rental property accounting is one responsibility many landlords push off.
Does this sound familiar? If so, you must get a grasp on it. After all, it's important.
Keep reading to learn some of the best rental property accounting tips for your Kansas City, MO, rental properties.
Keep Up With Your Rental Property Accounting
Most landlords are quick to handle certain aspects of their jobs. But they might slack on others, such as rental property banking and bookkeeping. Unfortunately, this leads to problems.
You'll have to deal with the rental property income and expenses at some point. When you do, you might feel overwhelmed. You might even look for ways to manage your stress because it can get so bad.
You can avoid this by keeping up with your accounting. Make time each week to record the income and all the rental property expenses. Spending a little time each week simplifies the process.
Separate Everything
Next, separate everything. There are two meanings of this tip.
First, keep your personal finances apart from your business finances. Combining these two things can lead to confusion and problematic financial statements and taxes.
The next meaning refers to separating your expenses. Develop a system to track your expenses in categories. The purpose is to have detailed records to help you cut costs and boost your income.
Summarize the Information
Keeping excellent records helps you manage your business more wisely. It begins with conducting a rental analysis before purchasing properties. You do this to ensure you make wise investments.
Next, track your vacancy rates with your units to look for trends. This process helps you find ways to reduce vacancy rates and boost income.
Secondly, create financial statements to summarize your financial information. Financial statements reveal information to help you make financial decisions.
One of these is an income statement. An income statement shows your rental income and expenses for a period.
A cash flow statement is also essential as it helps you see your business cash flow for a period. There are also others you can create to monitor your financial state.
Use Accounting Software
Using rental property accounting software is also helpful. You input the information, and the system processes it. It even summarizes it and helps you prepare your rental property taxes for the IRS.
Hire It Out
Your rental property accounting is a critical component of your business. Yet, it's a challenging aspect for many landlords. The good news is you can hire a company to handle it if you need assistance.
SCUDO is a property management firm in Kansas City, MO. We love real estate and offer all types of real estate services. Our expert team can help you with your accounting records and much more.
Reach out today to learn more!
