Around 56% of California residents own their own homes. The rest primarily live in rental properties. As a result, California landlords can find tenants relatively quickly for their units since demand is high.
But landlords have a lot on their plates. They have many duties relating to managing the properties. They must also manage their rental property accounting records.
Managing the books is part of every business, but it's a challenging part. As a landlord, you might want to learn the best tips for keeping your records.
Continue reading to learn some of the best rental property accounting tips for your business.
Don't Mix Business With Pleasure
One common mistake landlords make is mixing business and pleasure. While your rental property business is a big part of your life, it's a business. You also have a personal life and personal finances.
The first piece of landlord advice you must know is to keep these separate. This means keeping all your personal finance separate from your business finance.
For example, don't pay for rental property supplies with your personal credit card. Instead, get a business card to use for all your business expenses.
Keeping these separate helps you track your expenses more accurately. You won't have to sort your receipts or separate anything.
Track Every Dollar
Secondly, landlord tips always suggest tracking every dollar. You'll have two main categories of money to track:
You earn money through rental real estate by charging monthly rent to your tenants. Each time you receive money, you must categorize it as income. Tracking the money when you receive it helps you keep a running log.
Secondly, you can write off all your expenses. This means you should track every dollar spent on your properties.
Your expenses offset your income, as income minus expenses equals net income.
Many landlords use accounting software to track their records. If you use software, find a program designed for landlords. Landlord software makes accounting tasks easy.
You can use the software to record all your income and expenses. It lets you print reports whenever you need them. You can also use it to generate the information you need to file your business taxes.
Hire It Out
If you're looking for the simplest way to track your property records, consider hiring a property management firm. Property managers handle every landlord duty, including:
- Rent collection
- Finding tenants
- Signing leases
- Fixing and maintaining properties
- Accounting services
You can hire them for accounting services only. You can also add other services. They'll calculate your fees based on the services you choose.
Let the Experts Handle Your Rental Property Accounting
Did you know that property management firms handle rental property accounting? Of course, they also handle all the other duties of rental property businesses.
Hiring this task out is one of the best ways to get the job done right the first time. Reach out to us at PMI Merced to learn about our services and how we can help you with your business.