Keep your real estate business finances in order with this comprehensive guide to bookkeeping. Learn the best practices and tools to streamline your accounting.
As a real estate business owner, keeping track of your finances is crucial for success. Proper bookkeeping can help you stay organized, make informed financial decisions, and ensure compliance with tax laws. In this guide, we’ll cover the best practices and tools for bookkeeping in the real estate industry.
Understand the basics of bookkeeping.
The process of logging and organising financial transactions for a business is called bookkeeping. This involves keeping track of earnings, costs, assets, and liabilities. The goal of bookkeeping is to provide accurate and up-to-date financial information that can be used for decision-making and reporting. It’s important to have a solid understanding of bookkeeping basics before diving into the specifics of real estate bookkeeping services.
Choose the right accounting software.
Choosing the right real estate accounting software is crucial for efficient and accurate bookkeeping in your real estate business. Look for software that is specifically designed for real estate businesses, as it will have features and functions tailored to your industry QuickBooks, Xero, and FreshBooks are a few well-liked choices. Consider factors such as cost, ease of use, and integration with other tools you use in your business. It’s also important to ensure that the software you choose is compliant with any regulations or laws specific to your industry.
Set up your chart of accounts.
Before you start recording transactions, it’s important to set up your chart of accounts. This is a list of all the accounts you will use to track your business’s financial transactions. It’s important to organize your chart of accounts in a way that makes sense for your business. For example, you may want to separate income and expenses by property or project. Your chart of accounts should include categories such as income, expenses, assets, liabilities, and equity. You can use accounting software to set up your chart of accounts or work with a bookkeeper or accountant to ensure its set up correctly.
Track income and expenses for each property.
As a real estate business owner, it’s important to track income and expenses for each property separately. This will help you understand the profitability of each property and make informed decisions about future investments. You can do this by setting up separate accounts for each property in your chart of accounts. When recording transactions, be sure to assign them to the appropriate property account. This will make it easier to generate reports and analyse the financial performance of each property. Additionally, tracking expenses for each property can help you identify areas where you can cut costs and improve profitability.
Reconcile your accounts regularly.
Reconciling your accounts regularly is an important part of bookkeeping for any business, but it’s especially important for real estate businesses. This involves comparing your bank statements and credit card statements to your accounting records to ensure that all transactions are accurately recorded and accounted for. By reconciling your accounts regularly, you can catch errors or discrepancies early on and avoid costly mistakes. It’s recommended to reconcile your accounts at least once a month, but some businesses may need to do it more frequently depending on the volume of transactions.
Why Velan Bookkeeping Services?
Velan bookkeeping with its 16 years of experience as an outsourced bookkeeping services provider India. Offers Cloud Accounting and Bookkeeping, AR/AP, Payroll, and Controller services for various industry verticals. We cater to all types of clients, right from small businesses, CPA firms to Fortune 500 companies spread across the USA.