90% of Americans want to be their own boss for the income potential and flexibility. As a boss, you still may need help with certain aspects of business. Landlords fall into the problem all the time.
Owning an investment property is a great way to generate rental income, but it's more work than meets the eye. If you are struggling with rental property accounting, this guide can help.
Keep reading to learn the top three landlord accounting tips for Atlanta real estate owners.
1. Keep Finances in Order With a Business Bank Account
Many people don't realize the importance of opening a business bank account. You'll need an account separate from your personal funds for only business transactions.
When you open a business bank account, you will receive a debit card. You can also apply for a business credit card to pay for certain expenses.
All property-related income and expenses should correspond with this account. Commingling your business finances with your personal ones can make rental property accounting unnecessarily more difficult.
If the IRS were to audit your business, this could also cause an issue. The IRS must search through all your financial information because the accounts aren't separate.
2. Create Expense Categories
While most of your income will come from rent payments, expenses can greatly vary. Track your rental property expenses with categories that make sense to you.
A property manager will do this on your behalf monthly. They will implement an accounting system that works for your business from the start. Property expense tracking ensures you aren't spending money where it isn't needed.
This rental income management tip will depend on your specific rental property. However, there are common expense categories you might want to utilize, such as:
- Advertising
- Cleaning and maintenance
- Property management costs
- Property taxes
- Depreciation costs
With this information, you get detailed insights into how your property is performing. Additionally, you'll have what you need to see if you qualify for real estate tax deductions.
3. Make Collecting Rent Easy
Investment property finances are made up of collected rent payments. Rent day should be the best day of the month, not the most stressful.
Make collecting rent easier to keep track of the income your property generates. There are online rent collection apps and tools that work seamlessly with accounting software.
For example, a tenant portal is a great option that many property managers implement.
This tool allows you to automatically remind tenants when rent is due. They can even set up automatic monthly payments to avoid late fees. A tenant portal makes rent collection more convenient for landlords and renters.
The Lowdown on Rental Property Accounting
Nailing down rental property accounting is key to running a successful and profitable business. HNN Atlanta, Inc. Residential Property Management helps Atlanta landlords with comprehensive financial reporting.
Our web-based accounting system allows monthly report tracking. These detailed reports make it easy to track your investment through the owner portal.
You can trust that we will live by our mantra: Honest. Proactive. Dependable. Contact us today to get your finances in order.
