For real estate professionals, time is money. Your business can’t afford to spend hours away from interacting with your clients attempting to learn bookkeeping best practices or a complex accounting program. It’s not just agents. Brokers and Investors all need good bookkeeping. It’s how you’ll organize and analyze your business financial transactions and the overall financial health of your business. Today, Dorothy Harvey of Bookkeeping Geeks shares how you can be more proactive on the finance side of your real estate business.
Bookkeeping for Real Estate Investors
Investors are great at finding property deals, creating new business partnerships, acquiring capital, and generating cash flow. But, if you don’t focus on the details of excellent bookkeeping, then you won’t have the strategic view to scale your business.
While some online resources make it easier, many top-notch real estate investors don’t have the time to manage their account. If the idea of managing your accounting worries you, consider an accounting system and an experienced bookkeeper to help manage the program efficiently.
Here’s how our bookkeeper helps investors:
- Accurate and organized information saves money on tax preparation services
- Save time in the case of an IRS audit
- Documentation of deductions to avoid potential IRS tax penalties or back owed taxes
- Acquire capital by using real data from past performance
Programs like QuickBooks Online are great tools for real estate brokers and agents. You can track sales, commissions, and expenses by each listing. Proper account set up can also report all sales details; telling you exactly how profitable that listing was for your real estate brokerage.
Bookkeeping helps real estate brokers:
- Track cash flow, profit/loss, and net worth
- Compare your growth (or decline) year over year
- Understand what business strategies worked well and what didn’t
- Prepare business tax returns…without the stress of the shoe box
- Pay your bills on time
Good books help you make more strategic decisions about your real estate business. The numbers don’t lie and having an experienced bookkeeper will help you see the true development and health of your company.
For Real Estate Agents…
Most agents don’t have to be as involved with their books, but that doesn’t mean you don’t benefit from keeping your income and expenses organized. Generally, most real estate agents can focus their bookkeeping on these categories:
- Commission income
- Real estate fees and dues expenses
- Real estate continuing education expenses
- Vehicle mileage
- Marketing and advertising expenses
- Office expenses including rent and supplies
Ask a qualified bookkeeper or your accountant to see what makes the most sense for your unique situation. A professional can help you spend less time tracking your expenditures throughout the year. Plus, being proactive means no late-night hours (likely in March or April right at tax time) to get your books in order. Move over shoebox!
Real Estate Bookkeeping Benefits
We’ve talked about how real estate bookkeeping tracks financial transactions, and how it measures overall business performance. At Bookkeeping Geeks, we recommend that you review your financial reports on a monthly or at least a quarterly basis so you can adapt as needed.
Additional benefits include tracking job performance, cash flow, maintaining or improving your credit score (paying on time is a big thing many real estate pros miss), and of course, reducing stress around preparing your taxes.
Dorothy is very knowledgeable in her field and many other business sectors. She’s a true professional, great communicator, responds promptly, and is patient answering questions; sometimes the same questions multiple times! She’s delightful to work with. –Shalie Robles
What is Your Bookkeeping Strategy?
As you can tell, good bookkeeping is a key part of your business success. You can’t push your financial obligations off, so you have a choice to make about how you’re going to track your company finances. You can keep track of your finances yourself, use a program like Quickbooks, or hire a professional like Bookkeeping Geeks to help.
With the choice of accounting options available to businesses at any stage of growth, there is no excuse not to get focused on your finances. Why wait until you’re feeling the pressure of growth to get serious about your books?
In my experience, being reactive to their financial situation creates major headaches at tax time for real estate pros. It’s a bookkeeping best practice to start early and have a good foundation in place.
About Bookkeeping Geeks
Real estate professionals don’t make money by spending hours doing accounting. If you prefer spending your time working with clients, then free up more of that time to make more money.
Organization is KEY to the bookkeeping process. Dorothy Harvey is a certified Quickbooks professional. Contact our Tampa, FL based bookkeeper today to learn how we support real estate investors, brokers, and independent agents.