With a market value of $101 billion, the property management industry is one of the largest in the US. If you work as a bookkeeper for a management firm, you likely are working with a lot of money and clerical information every day.
Because of this, having a good property management bookkeeping system is critical to career success. Here, we’re going to talk about some of the best ways that you can succeed in these positions. Read on to learn how you can become a better property manager with the right mindset, software, and knowledge
1.Open Multiple Accounts
One mistake that rookie property management bookkeepers make is only using a single business account. This may sound like a sensible course of action, but it isn’t legal in
many states. A lot of states require landlords to have separate escrow accounts to hold security deposits that are accessible when tenants move.
In addition to meeting local requirements, having many accounts helps you get organized. You will be able to better track payments from different tenants that rent out various properties.
Each property should have its own bank account. You can clearly see which tenants are struggling to pay rent and who you need to reach out to. All funds also will be safer from threats because other accounts will be safe even if one is compromised.
2.Get the Right Technology
Bookkeeping is a challenging endeavor, so it’s important to work with the right solutions to help you along. Managed accounting and bookkeeping services provide you with away to keep track of your expenses and income. You don’t need to manually do so any longer.
Balanced Asset Solutions offers the processing of transactions between multiple companies and parties. It also charts accounts, showcases projections and segregations, and processes both payroll and paychecks.
Getting fully managed solutions that offer consulting, accounting, management reporting, accounts receivable, and accounts payable is a good choice. You won’t need to juggle multiple providers or issues. All you will need to do is remain in touch with a single provider and make sure that all technology is running smoothly.
3.Secure All Accounts
Using a single provider for your professional bookkeeping needs also helps to keep information secure. This is critical since the average company loses $6.71 million following any data breach.
With one integrated platform, you remain protected against these threats. You no longer need to worry about multiple security systems running in tandem to protect your information. Since bookkeepers work with sensitive financial information, it’s more important in this property management area than any other.
Make sure that you use an integrated multi-factor authentication system. High-level encryption can keep you from losing money. You also can ask your software providers about monitoring blips in regular operational trends to catch threats before they become a problem.
4.Set Up Individual Properties
As we brushed on earlier, it’s critical that you have separate accounts for all properties. These all will be managed within your singular accounting platform, but they will be separate from one another.
You must set up the following items for all properties:
- Software accounts within the fully managed platform
- Individual LLCs for each property to shield yourself from liability issues
- Bank account and credit cards for each property (this makes it easy to track expenses for a single unit or building)
- A rent roll that lets you easily visualize when rent is paid in spreadsheet form
- A general ledger chart of accounts for all properties so that you can quicklyprocess rent and other monthly transactions
5.Learn More About Taxes
As you likely expect, there are a lot of taxes collected on rent al properties. Property management systems are lucrative and you therefore may need to pay quite a bit for every property you own.
The way that you pay taxes directly correlates to your accounting and bookkeeping methods. It’s important that bookkeepers know exactly what they’re doing so that they can appropriately fill out tax forms.
If you use the cash basis method of collection, you report income and expenses as they take place. You count rent money as income that you receive during the tax year and report it as such. This is what you are taxes on.
This is the most common form of tax method. If you’re a private individual who’s just renting out a property, it’s the only real option.
However, larger property management businesses may use the ‘accrual’ accounting method. This means that income is counted when you earn it rather than when you receive it.
Regardless of what tax method you use, do your research and make sure that you know what you’re expected to pay. Set aside the appropriate funds.
6.Single vs Double Entry Bookkeeping
You also will need to choose whether you want to engage in single-entry or double-entry bookkeeping.
In a single-entry model, incoming and outgoing payments are each entered a single time. You only write them down once in your record. This may sound simple but can quickly get jumbled if you aren’t careful.
Most businesses use a double-entry system in which all transactions are written down twice. They’re recorded once as a debit and then another time as a credit. You enter the debit (the amount of money in the bank) and as a credit (the money owed to another entity) in two distinct accounts.
7.Perform Monthly Accounting Steps
Every property management business needs to do its monthly accounting as a cycle. This ensures that you don’t forget to do something important and negatively impact either your tenants and your business.
The first thing to do is receive rent payments. Accounting and bookkeeping software sends automatic monthly invoices so that tenants can pay on time. Automatic rent payments are also an ideal option to save your tenants time and stress about paying their monthly fees.
You then need to process all invoices for utilities and maintenance as well as other random expenses. Make a record of the electronic fund transfer invoices that you automatically receive. Print checks and information for all others.
Next, make sure your balance sheet cash amount matches the balance within your bank account. Put all bank statements into the software you’re using and compare the tware amount with your statement balance. If there is an error, find what was done incorrectly and fix it.
Finally, print all financial statements and file them away. This will give you a record of the money you have received and spent. You can use these records for future reference.
8.Manage All Receipts and Invoices
Receipt and invoice management is a challenge that many bookkeepers face. It’s important that you find an effective way to manage all of them together. Make sure to customize your software for the needs of your specific property management firm and your individual tenants.
No matter what you choose to do, make sure that you report and assess your management system regularly. You need to keep a ledger of all transactions made by your firm. Generate reports, download them, and meet with the owners whose property you work with.
This will ensure that everyone is on the same page and is provided with fair payment.
9.Stay Organized
As someone who works with a lot of financial information, it’s critical that you remain organized. Keep meticulous records of all transactions and ledgers in multiple places. Make sure that your computerized notes are backed up appropriately and accessible.
Be careful that you don’t lose anything and that you’re able to associate all notes with their respective accounts. Since property management bookkeeping requires work with many different tenants, this is critical.
10.Get Support When Necessary
While people tend to think of bookkeeping and accounting as something you do on your own, there’s no shame in asking for support. You can always ask other financial professionals within your firm for assistance. Don’t hesitate to consult online experts with questions that you have.
At some point, you will likely need help using the best bookkeeping software for property managers. Don’t hesitate to reach out for support with the system logistics when necessary. This is just as important as asking about finances and organization.
More Useful Property Management Tips
While there are many ways that a property management bookkeeper can stay organized and on top of their job, it’s important to have the appropriate tools to do so. Consider your individual needs and make an informed decision. Since we’re committed to helping you succeed in your chosen career, we look forward to hearing from you soon. Contact us with any remaining questions that you have about the best software and organizational tools on the market.
