20% of people living in the U.K. have a phobia when it comes to dealing with finances, according to a study from Cambridge University. Handling your finances or the finances for your rental business can be a pretty overwhelming undertaking.
However, various tools, software and best practices can help ensure your accounting is more straightforward, easier, and less stressful. The organisation is vital when handling landlord duties. To learn how you can improve your financial organisation, keep reading.
Accounting Tips And Software
Here are some of the best accounting tips and tools to help you manage the more daunting landlord duties. The success of your landlord endeavour is contingent upon staying organised and on top of your expenses, tenancies, and profitability. So, take these tips on and apply them to your accounting processes for best practice.
Tenant Tracking Tools
Tenant tracking tools are essential for ensuring a successful property rental business. You need to keep track of tenant payments and tenant communications. If tenants are late for payments, you will need knowledge of this to ensure you handle the issue promptly.
Keeping track of your tenants allows you to have better insight into your property’s profitability. Should you wish to refinance down the line, you will need evidence of your property’s vacancy rates and that your property is profitable. By using tenant tracking tools, you will have all of this information readily available and on-hand to make the refinancing process easier.
Increased awareness of your tenants’ leases is essential to ensuring no prolonged vacancy periods. You need to know when your tenants’ leases are up, or you might find yourself a month behind on preparing to advertise the property to prospective tenants.
If you need to pursue an eviction, having accurate records of communications and transactions between yourself and the tenant can be beneficial. Tenant tracking tools allow you to better manage leases, how much rent to charge, and tenant communications and avoid extended vacancy periods.
Digital income and expense tracking allow you to streamline your rental accounting processes and host all information on one platform. Being able to digitise your receipts means that you’re less at risk of losing tickets, simply scan your receipt and update your records. You can update your digital receipt storage from anywhere using a cloud-based accounting tool.
Automating rent invoices and late fees can save you a lot of time and ensure your landlord duties are performed on time without error. When tax season comes, you can easily share the digitised information with your accountant, and your accountant will have an easier time with your taxes.
The organisation is of great importance when it comes to landlord duties. Using digital and cloud-based tools like accounting software can help you improve the accuracy and reliability of your record-keeping.
Separate Personal And Business Bank Accounts
Whether you manage only one property or many different properties, it is essential to separate your personal and business bank accounts. It may even be wise to have separate bank accounts for each property you manage.
When your personal and business bank accounts are combined, your accountant will have difficulty distinguishing between personal and business expenses. You may also have tenants with similar names in different properties, so keeping separate accounts for each property you manage can be beneficial. You won’t get your tenants mixed up or confused.
Keep Track Of Expense Receipts
Keeping track of your expense receipts is essential to running a business and ensuring it is as profitable as it can be. When you spend money on items and services necessary for your business, it is all tax-deductible, which means you can get the tax from the item back in your tax return. If you are not keeping track of your expense receipts properly, you may miss out on your tax return, which will mean your business is not as profitable as it could be.
Update Your Books Regularly
Updating your books weekly, as opposed to monthly, can allow you to break down the work into sizable chunks, which may prevent you from becoming overwhelmed. Being left with mountains of expense receipts and bank statements isn’t ideal and could take you days to sort through. So, be sure to update and reconcile your books as often as possible to lessen the burden and reduce stress. When you reconcile your books regularly, you can ensure your self-assessment tax return is more accurate, and that all information is inputted correctly.
By using all the tools and software available and implementing best practices, you can reduce the stress and overwhelm that comes with managing the finances of your landlord business. Organisation, along with helpful tools, is the key to ensuring your business’ profitability and future success. Handling the financial elements of your landlord business doesn’t have to be stressful, and knowing the right tools to use can help you to manage these tasks more effectively.