So, you bought a Melville, New York, rental property without thinking about the accounting side of things. Yes, you know you can generate rental income to build wealth, but how does it all work in practice?
This guide aims to help struggling landlords implement bookkeeping best practices. With these rental property accounting tips, you'll be well on your way to reaping a return on investment.
Keep reading for three financial management tips.
1. Transaction Tagging
Rental property accounting is streamlined with automated transaction tagging. Many rental property expenses and income are repetitive. For example, maintenance coordination is an ongoing expense you can expect.
These predictable expenses make it easier to tag the same types of records each month. Automate these transactions by creating categories and assigning each expense or income to their respective location.
Tools like rental property management software can help you automate transaction tagging. You'll save a lot of time and energy you'd otherwise have to spend manually placing records into different categories.
The result is an up-to-date and organized book with minimal effort.
2. Separate Bank Accounts
The number one rule of learning how to manage an account for a rental property is to separate business from personal.
One of the best New York landlord tips is not only to separate your personal finances but to have a different bank account for each property.
Without separate accounts, your bookkeeping can get messy, and fast. Reporting and tagging are impossible when accounts are commingled. Remove this complexity by opening a business bank account for every rental property you own.
When you open an account, you should also get a debit or credit card that you can use to pay for regular business expenses.
If you get audited and your accounts aren't separate, you could end up owing the IRS a lot of money. Accurate records can help you save money when it's time to pay New York rental property taxes.
3. Document Management
Rental property accounting services will tell you how important it is to manage documents. Leases and other formal agreements need to be signed by all parties and maintained within your records.
When you receive rent or other tenant payments, such as security deposits, provide a receipt and maintain a copy for yourself.
You can use this information to keep an itemized record of all rental property income. The IRS requires income disclosure. The best way to comply with this is to maintain a rent roll that tracks tenant payment amounts and dates.
Let Us Manage Your Rental Property Accounting
If all of this seems like too much to handle, let us do the work for you! PMI Lighthouse is a full-service property management company with accounting experience in the local area.
We help Melville, New York, landlords like you with rent collection, financial reporting, and more. Our professional staff provides quality property management services to increase your earnings as an owner.
Our technology and financial systems equip us to manage your property with ease while maximizing revenue. Let's get started! Contact us today to learn more about our services.
