B&J Bookkeeping helps all sorts of businesses and individuals with their bookkeeping. A great business anyone can go into is rental properties. Many homeowners opt to rent out their past homes in order to continue reaping the benefits. They may repeat this over and over or buy other properties for the specific purpose of renting. One of the biggest challenges of this type of business is staying on top of the finances. As a result, below we will share all about bookkeeping for rental properties.
1. Keep Accurate and Detailed Records
You may just be interested in how much money you made this month, but there is so much more to that. We highly recommend you keep records on everything from the initial property purchase price all the way to last lightbulb you replaced. This includes all paperwork, receipts, tax forms, etc. These are all crucial to understanding exactly how much you are making or even losing from your rental properties.
2. Keep Separate Accounts for Each Property
Even those of you with only the one rental property need to keep all expenses and income from that property separate. Again, this is to keep the right numbers so you can make adjustments accordingly. This also to:
3. Be Ready for Tax Time
Your rental property incomes are a business just like any other. You need to file taxes just like any other. If you made a profit, the IRS will want a cut of it. If you are posting a loss, you will want to write that off on your individual or joint taxes. Just check here on the IRS site to see how complex taxes for rental properties can be.
4. Expenses, Expenses, Expenses
When you used to rent, you may have been the perfect tenant. You may have paid the rent on time, taken care of the property, and never had a serious issue. Do not expect that trend for your rental properties. Even tenants with the best references can have a bad string of luck. The weather can create havoc on your properties, especially here in Houston. Even lawmakers can throw all sorts of monkey wrenches into the best laid business plans. This is why we recommend having at least a few months of expenses on hand to deal with fluctuating expenditures.
5. Get a Bookkeeper
Just one small error on your books can result in big trouble for you. You have enough to worry about with keeping tenants happy, collecting rents, maintaining the property, and adapting to all sorts of challenges. Only a professional, trusted bookkeeper in your area can tell you to the penny and to the day where you are financially in your rental properties. They can also help you prepare for tax time, as well as properly file your taxes in an acceptable amount of time.
Bookkeeping for Rental Properties in Houston
Finally, those who live in Texas should feel free to contact us to learn more on how we can help your rental properties business keep ahead of its books. We proudly serve property owners of all types from residential to commercial who need payroll, reconciliation, and bookkeeping services.
