20% of people living in the UK have a phobia when it comes to managing their finances, according to a Cambridge University study. Managing your finances or the finances of your rental business can be quite an overwhelming undertaking.
However, various tools, software, and best practices can help make your bookkeeping easier, simpler, and less stressful. Organization is key when managing homeowner duties. To find out how you can improve your financial organization, keep reading.
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Accounting advice and software
Here are some of the best accounting tips and tools to help you handle the toughest homeowner tasks. The success of your landlord business depends on your organization and your expenses, your rentals and your profitability. So, take these tips and apply them to your accounting processes for best practices.
Tenant tracking tools
Tenant tracking tools are essential to ensure the success of a real estate rental business. You need to track tenant payments and communications. If tenants are late with payments, you’ll need this to ensure you deal with the issue quickly.
Monitoring your tenants allows you to have a better view of the profitability of your property. If you want to refinance later, you will need proof of your property’s vacancy rate and the profitability of your property. By using tenant tracking tools, you’ll have all of this information readily available and at your fingertips to help with the refinancing process.
A better knowledge of your tenants’ leases is essential to avoid prolonged vacancy periods. You need to know when your tenants’ leases are in effect, or you could find yourself a month behind in preparing to advertise the property to potential tenants.
If you need to pursue an eviction, it can be beneficial to have accurate records of communications and transactions between you and the tenant. Tenant tracking tools allow you to better manage leases, how much rent to charge, and communications with tenants and avoid extended vacancy periods.
Digital income and expense tracking allows you to streamline your rental accounting processes and house all information in one platform. The ability to scan your receipts means you are less likely to lose tickets, just scan your receipt and update your records. You can update your digital receipt storage from anywhere using a cloud-based accounting tool.
Automating rent bills and late fees can save you a lot of time and ensure your landlord tasks are completed on time and error-free. When tax season comes, you can easily share the scanned information with your accountant, and your accountant will have an easier time with your taxes.
Organization is of great importance when it comes to the duties of the owner. Using digital and cloud-based tools, like accounting software, can help improve the accuracy and reliability of your record keeping.
Separate personal and business bank accounts
Whether you manage a single property or several different properties, it is essential to keep your personal and business bank accounts separate. It may even be a good idea to have separate bank accounts for each property you manage.
When your personal and business bank accounts are combined, your accountant will have a hard time distinguishing between personal and business expenses. You may also have tenants with similar names at different properties, so it may be beneficial to maintain separate accounts for each property you manage. You won’t get your tenants mixed up or confused.
Keep track of expense receipts
Keeping track of your expense receipts is essential to running a business and ensuring it is as profitable as possible. When you spend money on items and services needed for your business, everything is tax deductible, which means you can reclaim the tax on the item on your tax return. If you don’t track your expense receipts properly, you risk missing your tax return, which means your business isn’t as profitable as it could be.
Update your books regularly
Updating your books weekly, rather than monthly, can allow you to break down work into important chunks, which can save you from being overwhelmed. Ending up with mountains of expense receipts and bank statements is not ideal and could take you days to sort through. So be sure to update and reconcile your books as often as possible to ease the burden and reduce stress. When you regularly reconcile your books, you can ensure that your self-assessment tax return is more accurate and that all information is entered correctly.
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By using all available tools and software, and implementing best practices, you can reduce the stress and overhead of managing your business owner’s finances. Organization, combined with useful tools, is the key to ensuring the profitability and future success of your business. Managing the financials of your landlord business doesn’t have to be stressful, and knowing the right tools to use can help you manage these tasks more effectively.