A real estate portfolio can be a wonderful way to grow your investments and provide a business opportunity for future generations. Whether it be commercial or residential real estate, it is important to keep detailed books for each property. As your portfolio grows, bookkeeping can become time-consuming and overwhelming, leaving you at risk of missing out on valuable tax deductions and opportunities. An outsourced accountant might be just the help you need to maintain your books while growing your real estate portfolio. Below you will find out just what an outsourced accountant can do for your real estate business, and why real estate accounting might be the best thing to outsource this year.
Outsourced accounting for real estate investors
Real estate can be one of the best investments to make for personal use, or as a business. However, unless you have a background in accounting, maintaining the books can be overwhelming and small errors can quickly lead to trouble. Just as you would outsource other tasks associated with running a business, outsourcing your real estate accounting is quite common and can easily pay for itself.
An outsourced accountant can help grow your business, maintain your books, and ensure all ingoing and outgoing transactions are accounted for, giving you the ability to stay on top of cash flow. An accountant will also be able to assist in making sure each property’s books are kept separate in order to comply with IRS requirements.
Keeping the books of a real estate portfolio is just as important as any other business model. All income and expenses need to be properly accounted for, and you’ll need updated books to keep you current on taxes due. Having an outsourced accountant provides the accounting expertise needed to maintain records while reducing the budget constraints of a staff accountant. An outsourced accountant can also prepare the books for tax season, making certain no deduction gets overlooked.
Managing tech for a real estate portfolio
An outsourced accountant can offer accounting solutions that can increase your bottom line, automate processes, increase productivity, and minimize risk. Cloud accountants work with real estate investors to integrate cloud-based accounting solutions that are custom-tailored to your needs. Repetitive tasks, such as manual data entry, can become automated through the use of cloud-based apps, saving the business time and money. Businesses managing multiple rental properties find cloud-based apps to be incredibly useful in expense tracking and even payroll.
Whether you own commercial real estate, long-term residential units, or short-term vacation rental properties, expenses will add up quickly. Over the course of the year, expenses will add up which could mean a big tax deduction, saving your business money. It is vital to keep track of all expenses, specific to each property, with a consistent real estate accounting process. Pulling bank and credit card feeds into Xero or another cloud bookkeeping platform can help you ensure no expense slips through the cracks. We have put together a comprehensive guide of the top small business tax deductions that you won’t want to miss out on. In this guide, you will find small business tax tips, detailed examples, and strategies to track expenses related to your real estate properties.
Many real estate investors hire employees, freelancers, or contractors for marketing, cleaning, maintenance, groundskeeping, and administration. Keeping track of each employee’s time, payroll taxes, and benefits can be incredibly time-consuming for business owners. Payroll apps, such as Gusto, allow employees and the business owner to track hours, view benefits, and automatically pay and file employment taxes through one simple app.
Cloud-based accounting apps can be integrated with one central accounting hub such as Xero to reduce the need for double entry. All information will be brought together, viewable in one customizable dashboard and can be assigned to each property for accurate bookkeeping. For commercial real estate, individual tenants can be assigned to their appropriate accounts, helping you stay on top of rent payments. A cloud accountant can work with you to ensure everything is integrated properly, and can also offer ongoing support based on the business needs and goals.
Secure your real estate investments with a trusted accounting partner
Owning multiple properties oftentimes means multiple hands in the business. While the help can greatly benefit your business, we sometimes see the unfortunate situation where sticky hands are offering help for all of the wrong reasons. When you have a trusted partner on your side to help manage the back office of your business, you can rest easy knowing your finances are being appropriately managed and tasks are being accomplished.
Businesses, regardless of size or industry, should have proper protocols in place to mitigate against internal and external theft—could be data theft or monetary theft. While many business owners feel they have a good eye on all accounts and hire employees believing they are honest individuals, it’s not uncommon for theft to go unnoticed for an extended period of time. These situations usually begin with minor discrepancies that grow over time. While you may not wake up to see your business bank account drained overnight, a few dollars here and there will really add up over the years.
A trusted partner and outsourced accountant can ensure proper checks and balances are in place to minimize these risks. For example, a single employee should not be in charge of approving payroll and writing his or her paycheck—this process requires at least two individuals. Having a trusted partner, especially as your real estate portfolio grows, can relieve your stress as the owner, knowing you have an experienced financial advisor working with you to manage your real estate asset finances with your best interests in mind.
Our experienced team offers financial services, such as outsourced accounting, outsourced CFOs, and family office services, to suit the needs of your business and portfolio. We would be honored to assist you in managing your real estate portfolio and provide real estate accounting services. Our firm is based on building client relationships with a foundation of trust. If your real estate portfolio is at a point where accounting is consuming too much time or things are slipping through the cracks, it might be the right time to enlist the help of an experienced financial professional. Contact our team to schedule a consultation.