As a property manager, maintaining accurate financial records is essential to ensuring the success of your business. In addition, your role involves monitoring assets, income, and expenditures of your business. Considering the substantial cash inflows and outflows that define your business, it is important to have a strong foundation in bookkeeping, established processes, and reliable property management bookkeeping software to facilitate accuracy and efficiency from rent collection to vendor invoice management.
Bookkeeping in property management is an essential aspect of managing the business. It involves keeping track of financial transactions and maintaining accurate records. Proper bookkeeping is crucial to ensuring the success of your business. To stay on top of your property management bookkeeping, you need to make sure that your workers and tenants remain on top of their payments and budgets as well. This will help in setting the right direction for the cash flow of your business. Organizing the financial records will help you to keep track of credit and debit records and eliminate any confusion or missing data which may happen in the cash flow. The only solution is to have property management bookkeeping for your business and get rid of the stress of maintaining financial records.
Read more to learn about the ten steps for successful bookkeeping in property management and tips to help property managers stay organized, profitable, and accurate.
- Maintain Separate Business and Personal Bank Accounts
As a property manager, it is essential to maintain separate business and personal finances. This means you will have separate bank accounts and credit cards for your property management business which can help you keep your records accurately and minimize errors.
- Set Up an Accounting System:
Setting up an accounting system is crucial for successful bookkeeping in property management. You can use accounting software such as QuickBooks or Xero to help you track your finances, generate financial statements, and reconcile bank accounts.
- Categorize your Transactions:
Categorizing your transactions is an important part of bookkeeping. You should categorize your transactions like rent payments, maintenance expenses, and taxes to make it easier to track your finances and generate reports. This can help you to maintain organized finances and allow you to make the right financial decisions.
- Choose Perfect Bookkeeping Method:
Choose a perfect bookkeeping method that suits your business and fulfills your requirements whether you want a single-entry or double-entry bookkeeping system. In single-entry bookkeeping, both income and expenses will be entered only once. On the other hand, double-entry bookkeeping is commonly used by business owners, in which every transaction is recorded twice i.e.; once as debit and once as credit.
- Reconcile Bank Statements:
Reconciling bank statements is essential to ensure the accuracy of your business’s financial records. It is the best way to reconcile your bank statements with your accounting records regularly to identify errors or discrepancies.
- Maintain Accurate and Updated Financial Records:
It is important to maintain accurate and updated financial records for a successful business life. You must keep all the financial documents like invoices, receipts, and bank statements organized and accessible.
- Monitoring the Expenses and Prepare for Unpredicted Expenses:
As a business owner, monitoring your expenses is vital to ensure that you stay within your budget. You should regularly review your expenses and identify areas where you can reduce costs. Even if you have diligence in your work, unpredicted expenses may still occur. To avoid this, it is important to establish a contingency fund. Also reviewing expenses from the previous year and estimating sufficient reserves can help in calculating the amount of reserves needed to meet comparable expenses in the next year.
- Prepare Financial Statement:
Preparing financial statements is an essential part of bookkeeping in property management, the income statement, balance sheet, and cash flow statement provide valuable information about your business’s financial health, and this can help you to make informed business decisions. Also, it is important to generate financial statements regularly and review them carefully to get an idea about your business’s performance.
- Maintaining the Cash Flow:
Even if you have positive cash flow in your business, it does mean that your business always equates to a positive financial standard. In property management bookkeeping, not all expenditures in cash are considered expenses. For example, refunding a security deposit relies on a liability account but affects cash flow, and investing in expensive equipment, like a computer, is regarded as holding a fixed asset.
- Hire a Professional Bookkeeper:
Hiring a professional bookkeeper can help you manage your finances and ensure the accuracy of your financial records. A bookkeeper can help you keep up with bookkeeping tasks and generate financial reports.
By following these ten steps, you can manage your finances effectively and ensure the success of your property management business.
Bookkeeping practices for property management keep your business financially healthy, ensure regulatory compliance, and reduce liability risk. While acquiring the fundamentals and using tech tools will give you an accurate picture of the business and support your growth strategy, daily monitoring practices can help ensure data accuracy.
Remote Books Online:
At Remote Books Online, we have a dedicated bookkeeper to manage all the bookkeeping services that can fulfill our client’s requirements. We follow all the steps so that our clients will not experience any difficulties in their tax preparations. Remote Books Online completes your bookkeeping and financial statements for filing taxes. We take the security and privacy of our customers seriously. We protect your data with 256-bit SSL/TLS encryption—the same level of encryption as online banking.
Remote Books Online also provides first-month bookkeeping services for free and will do documentation of all transactions and essential journal entries. Get the qualified bookkeeping assistance you require. Speak with a representative to obtain an estimate and schedule a meeting with a Certified QuickBooks Pro Advisor to review your financial records. Contact us today and get our professional services now!