As a landlord, you have the opportunity to save money on your tax returns through various tax deductions. However, capturing these savings is only possible with organized financial records.
Good rental property accounting is the key to unlocking these tax breaks. It also gives you a clear picture of your business's performance, helping you make smarter decisions.
Keep reading to discover four essential tips for managing your rental property accounting records in Jacksonville, FL.
1. Separate Accounts
Open a bank account for each property you own. This makes managing your rental income and expenses simple.
Every transaction flows through this account, which gives you a clear view of each property's financial situation. Also, use a unique account for security deposits if you're not posting them as a surety bond.
In Florida, landlords must store security deposits in interest-bearing accounts. This simplifies calculating the interest to be returned to the tenants.
2. Pick the Best Accounting Software
Use good accounting software to manage your money better. The software should make it easy to track income and expenses.
Features to look for include automatic entry and categories. Automatic entry of recurring transactions simplifies the accounting process, and categorizing transactions by specific areas, like each rental property, aids in organization.
QuickBooks Online is a comprehensive choice for rental property businesses. Similarly, FreshBooks stands out for its user-friendly approach, especially in invoicing and expense tracking. Both platforms offer thorough expense tracking, invoicing capabilities, and detailed financial reporting.
3. Manage Your Financial Documents
Save every receipt, bill, bank statement, and financial paper. Arrange them by property and year so you can find them quickly. It's also smart to make digital copies to keep them safe.
Having all your records in order is a big help when you're reviewing tax statements or if you're audited. Without neat records, it's much harder to understand your rental's finances.
If there's a legal dispute, having correct accounts shows you followed the lease and rules. Should the issue go to court, well-kept accounts can be critical evidence that might help win the case.
4. Track All Your Expenses
Write down every cost, even the small stuff. Water bills, fixes, and even driving for rental tasks can lower your taxes.
Regular expense tracking also helps you plan for future costs and find ways to save money. For example, if you know that more maintenance is done in a particular season, you can budget accordingly.
Create an expense spreadsheet using office software like Microsoft Excel or Google Sheets. Columns can be used for dates, categories, and amounts.
Expert Help for Rental Property Accounting
Good rental property accounting involves separating your accounts, choosing the right software, and diligently tracking expenses. Whether planning for costs or maximizing tax discounts, these strategies can provide a clearer financial picture for your rental business.
If this seems overwhelming, Round Table Realty Property Management is just a call away. With over 40 years in the industry, we excel at helping landlords master their property's finances.
Contact us today to start improving your business's financial health.
