With 44 million households renting accommodation across the US, billions of dollars change hands in the property management market every year. This means property managers need to be at the top of their game in accounting for all this rental income.
Fortunately, they have the tools to keep track of both owner and tenant accounting needs accurately and effectively.
Here's how property managers help alleviate the headache associated with tallying up your property management finances every month.
Property Managers Use Top Accounting Software
Property accounting software helps property managers and landlords stay on top of their chart of accounts. This includes things like:
- Revenue - the money your properties bring in
- Expenses - costs involved with the upkeep of the property
- Assets - banking accounts and properties owned
- Equity - money you invest in your property business
- Liabilities - debts like mortgages and loans
Everything in property accounting revolves around the chart of accounts.
A property management accounting system makes it easy to input transactions in the correct category.
It can also create important accounting reports at the touch of a button. These include a balance sheet that helps you determine the overall health of your property investments.
It helps eliminate human error, saves you time, and ensures instant access to the information you need.
Property Managers Assist With Tax Reporting
You must track your property investment expenses to ensure accurate tax reporting. Deductible expenses can help reduce your tax bill by a huge amount at the end of the tax year.
Some potential deductions include legal fees, management fees, property taxes, repair costs, and more.
A property manager has hands-on involvement with the day-to-day running of your properties. They also have extensive knowledge of valid income tax deductions.
The combination of these two factors means a property manager can help you save a ton of money at income tax time.
You can look up the complete list of deductible expenses in IRS Publication 535.
Manage Monthly Bank Reconciliations
One of the best accounting tips for property investors is to compile a monthly bank reconciliation. This helps you keep a check on your accounting systems and gauge how well your investments are doing.
It's a good way to spot errors, missteps, typos, and missing entries.
Setting up and balancing this document is a time-consuming and often frustrating process. When you hire a property manager, they'll take care of the entire process for you.
That way, you can keep an eye on things easily and effectively as and when you want to, without all the hard work.
It All Adds Up
Unless you're a qualified accountant, there is a good chance property management accounts are way out of your league. It takes experience, time, and patience to balance the books and enjoy tax benefits.
Rather, stick to what you do best and focus on maximizing your property investment portfolio. A property manager will take care of the rest.
Wolfnest property managers specialize in taking care of residential and commercial investment properties in Salt Lake City, Utah. Get in touch for assistance with all your property management needs.