You've just become a new landlord in Fairfax, VA, which means you will be making a passive income of an average of nearly $2,000 a month. However, you might realize that being a landlord isn't so passive once it's time to organize your finances.
If rental property accounting is one of your biggest struggles, then you have to find a solution and fast before it becomes overwhelming.
Find out how to get your bookkeeping and expenses in order below.
One of the best bookkeeping strategies is to stay on top of your finances. Never wait to record an expense or payment because you could forget or end up making a mistake.
Keep your records on the go or designate a time that is devoted to your rental property accounting.
Know What Reports You Need
A successful landlord knows what forms are required to keep your finances in order. Various forms will tell you about your profit margins, cash flows, tax requirements, and expenses.
By using appropriate reports, you can improve your workflow and increase your profits.
DIY accounting takes a lot of organization and record-keeping skills. Take the time to develop a filing system whether it is hardcopies, digital records, or both. If you do keep digital records, then be sure to back up and secure these files.
Use a Separate Bank Account
Property owners should never use their personal bank accounts for their rental units. In fact, you need to have a separate account for each property. This is the best way to keep accounts separate and organized so that they don't get mixed up.
Store all Receipts and Track Expenses
When you make purchases or pay contractors, always keep the receipt or invoice. Create a separate file for each type of payment and contractor to track expenses.
Keep Tenant Reconciliation Files
Your biggest liability is with your tenant(s). Therefore, your lease and any other legal documents should be stored along with reconciliation payments. This may include deposit slips, rental late fee charges, rental payments, and pet fees, as well as credits or refunds given to each tenant.
It is also important to include any eviction notices and court filings that affect 1 out of every 69 renters in Fairfax, resulting from a default in rental payments.
Get Accounting Assistance
Real estate management can be complex, especially when you have multiple properties. Luckily, you don't have to handle the task of accounting and reporting alone. A property management service keeps your finances in order and provides you with reports to give you an overview of your ROI and expenses.
At PMI Fairfax, we also help you with tax preparation and tenant turnover to manage the transfer of funds. In addition, we communicate with vendors and contractors to make maintenance of your property easy.
Rental Property Accounting Can Increase Your ROI
When done properly, rental property accounting can increase your profits by organizing and even eliminating expenses. It also reduces mistakes and protects you against false liability cases.
Having a professional accountant from PMI Fairfax will only enhance the benefits of keeping up with your finances.
Get started by contacting us to discuss how we can take the worry out of your accounting tasks.