Accounting can often feel boring – we get it. Record keeping and filing and documentation – not exactly exciting.
But, when you rent out a Bellevue home, you’re essentially running a small business. You need to treat it that way, which means you have to make sure your financial records are in order.
Accurate financial reporting that won’t raise any flags with the IRS starts with basic accounting. You need to track your income and expenses.
Here are some Bellevue landlord basics when it comes to rental property accounting, record keeping, and financial reporting.
Put Together a Rental Accounting System
Even if you are only renting out one property, you need an accounting system that’s detailed, accurate, and easy to use. Several apps and software programs can make this easy for you. Try Appfolio, Buildium, Quickbooks, or similar platforms. Even if you don’t want to use an app, you’ll need an electronic record of the money that’s coming in and the money that’s going out.
Some tips to make sure your accounting is easy and clear:
- Collect rent online when you can. That will reduce the manual entries you have to make in a ledger or spreadsheet.
- Set reminders for any property-related bills that need to be paid such as landscaping, pest control, mortgages, and insurance payments.
- Run a report every month to see whether you’re earning or losing money on your property.
When you have a sound accounting system in place, filing taxes will be much easier.
Keep Personal and Business Accounts Separate
The income you earn from your rental property or properties should be kept in a separate account and not left to mingle with your personal finances. Setting up a separate bank account isn’t difficult, and it will protect you and your tenants from any financial mistakes or missteps.
Typically, you can set up a new bank account online. If you have more than one rental property, consider whether you’ll have one account for all of them or if you’ll open up a separate account for each property. It might be easier to keep them separated so you can better account for things like security deposits, maintenance costs, etc.
Having separate accounts for each property allows you to keep track of the major expenses you incur by renting out that property, have a record of the rental income you’ve earned, and evaluate how the property fits into your portfolio. Plus, it will make bookkeeping and filing your taxes much easier.
Surround Yourself with Bellevue Property Management Professionals
One good workaround for your accounting and banking issues could be professional property management. If you don’t think you have the time or the resources to manage multiple accounts, financial reports, and bookkeeping, consider handing this off to a professional Bellevue property manager. Management companies have systems in place already, and we invest in the type of technology that can ensure all of your accounting is managed seamlessly.
We’d be happy to tell you more about how we handle financial reporting and documentation. Learn more with us, and contact our team at Real Estate Gladiators.