Are you among the 39% of Americans who feel anxious when doing math?
While most of us love earning an impressive income, math is unavoidable when you own a rental property. Without math skills, taxes will feel impossible.
What should landlords know about accounting to keep their business on track? Read on for our rental property accounting guide.
Invest in Rental Property Accounting Software
Using specialized rental property accounting software can simplify your financial management tasks a great deal. These programs are tailored to the needs of landlords and property managers. They offer the following features:
- Income and expense tracking
- Rent collection
- Report generation
Look for software that integrates with your banking accounts for seamless transaction recording.
Track All Rental Property Expenses
You need detailed records of every rental property expense. This includes the following:
- Mortgage payments
- Property taxes
- Insurance premiums
- Maintenance costs
- Repairs
- Utilities
- Any other relevant expenditures
Categorize expenses to streamline tax preparation and financial analysis.
Document Rental Property Income
Keep thorough records of rental income from tenants. Note the following:
- The amount received
- The date of payment
- The tenant's name or property unit
Whether you receive payments via cash, check, or electronic transfer, ensure that each transaction is properly documented and accounted for in your records.
Stay Updated on Rental Property Tax Regulations
Stay informed about local and federal tax regulations that apply to rental properties in Atlanta, GA. Understand which expenses are deductible and take advantage of available tax benefits.
Implement Effective Rental Property Banking Practices
Establish separate bank accounts for each rental property to streamline financial management and maintain clarity in your accounting records. Use these accounts exclusively for rental-related transactions, including the following:
- Rent collection
- Expense payments
- Property maintenance costs
Reconcile bank statements often to identify discrepancies and prevent errors.
Maintain Organized Documentation
Keep every document in an accessible and organized space. This includes the following:
- Lease agreements
- Invoices
- Receipts
- Bank statements
- Tax documents
- Correspondence with tenants
Digital storage solutions can help streamline document management and ensure that important records are not lost or misplaced.
Monitor Cash Flow Often
Monitor the cash flow of each rental property on a regular basis to assess its financial performance. Compare income against expenses to determine profitability and identify areas for improvement.
Do the following:
- Conduct periodic financial reviews to track trends
- Identify potential issues
- Make informed decisions about property management
Plan for Future Expenses
Anticipate the following future expenses so you can budget:
- Property upgrades
- Renovations
- Major repairs
Setting aside funds for maintenance and capital improvements can help prevent financial strain and ensure the long-term sustainability of your rental properties.
Do You Need Help With Rental Property Accounting Records in Atlanta?
Most landlords dread rental property accounting. While you don't have to love crunching numbers, these tricks are sure to help.
Would you rather delegate rental property accounting to a pro? Contact PMI Georgia to learn how we can help your Atlanta rental property business.
Our team has over 20 years of experience in the local real estate industry.
