Real Estate Bookkeeping 101: Tips for Keeping Your Finances Organized
February 27, 2023 | Written by: Sohail Afzal
Are you a real estate investor or landlord who needs to get your finances in order? Bookkeeping can seem daunting, but it is essential to managing your business and avoiding financial pitfalls. In this article, we’ll provide crucial tips for getting started with bookkeeping as a real estate investor and share some ideas for making the process more manageable.
Whether you’re starting as an investor or have been at it for years, these pointers will help keep your books organized while saving time and money. With a little effort up front, you’ll be able to stay on top of your finances without taking away from other essential tasks related to running your business. Read on to learn more about how easy and stress-free real estate bookkeeping can be!
Invest in Property Insurance and Liability Insurance
Good bookkeeping is the key to success in any real estate business. Property and liability insurance can protect your investment and provide peace of mind regarding potential losses or damages. Property insurance will cover any physical structures such as buildings, fences, or garages on the property and may even include coverage for furniture and personal items.
Property and liability insurance policies can save you significantly should property damage or cases occur. Liability insurance, such as malpractice insurance and errors & omissions, will help protect against any lawsuits related to negligence in your business activities. Keeping a close eye and meticulous records on these two aspects of your business is an integral part of good bookkeeping that all real estate entrepreneurs should consider.
Have a Separate Bank Account for Your Real Estate Business
Having a separate bank account for your real estate business is essential to good bookkeeping. Not only does it make it easier to track expenses and sources of income, but segregating funds make sure that all capital invested in the venture can be accounted for and offers additional protection in case of a dispute.
Additionally, having a separate business account reduces the risk of personal liability in terms of taxes; by using an entirely different account with its own documents and records, there is no confusion regarding the separation of business from personal transactions.
Good bookkeeping requires more than just organization; it requires diligence and insight into best practices. Taking advantage of all available resources, such as having a separate bank account, is key to achieving financial success in your real estate business.
Hire Bookkeeping Services
Running a successful real estate business takes more than just showing properties and closing deals. It also involves having accurate records of your expenses and income to remain organized and compliant with the law. Finding the time to do this while managing all the other aspects of your business can be difficult, which makes it essential to consider bookkeeping services in Toronto to ensure proper record-keeping for your company.
Contacting bookkeeping services is an investment that is invaluable when managing or growing your real estate business. A professional bookkeeper can organize financials for your firm, calculate profit margins, and ensure that you’re reporting profits accurately to the CRA. They can even provide insight into what areas you can improve upon to increase profitability in your business.
Remember to Pay Your Taxes!
Every real estate business needs to keep its bookkeeping up-to-date and organized, but one often overlooked element of good bookkeeping is ensuring your taxes are paid on time. Not only will staying on top of this help to minimize costly fees and possible penalties, but it will also give you peace of mind knowing that all your bases are covered. It’s relatively easy to set up reminders or plan ahead to ensure your taxes are taken care of with minimal stress each year. Taking the time to stay on top of this crucial aspect of good bookkeeping in your real estate business makes it much easier to ensure a smooth transaction when working with clients.
Congratulations on making it to the end of this blog post! You are now officially a Real Estate Bookkeeping 101 expert. If you found this information helpful and would like some help putting it into action, we would be happy to chat with you about our services. We’re an accounting firm in Toronto specializing in real estate bookkeeping, and we know a thing or two (or ten) about the organization. So please don’t hesitate to contact us if you need help controlling your business finances. In the meantime, happy bookkeeping!
Sohail Afzal, CPA, CMA, MBA
Sohail Afzal, (CPA, CMA, MBA) is the founder & CEO of GTA Accounting Professional Corporation. He is a highly experienced Chartered Professional Accountant and businessman himself and understands the challenges that many businesses face when it comes to cash flow management. As an experienced business consultant & tax advisor, he is helping companies grow by providing the technical, financial, and contractual information necessary for strategic decision-making.