Sat. May 18th, 2024

Not everyone investing in real estate knows how to manage bookkeeping. Some of the less-informed investors don’t even know the importance of bookkeeping. A lot of landlords believe that keeping the books of the rental business is a tedious task. Many of them hire property managers just because they cannot handle bookkeeping. Though bookkeeping is not fun, it is important to have up-to-date and accurate financial records. This is something you can easily do on your own. All you need is a free rental property management software. And, there are some bookkeeping mistakes you have to avoid. This can even help you in saving some expenses.   

Following are the five bookkeeping mistakes you have to avoid: 

Using The Wrong Filing System 

You cannot use any random box as a filing system. Dumping everything in a corner of your room for a year is not a good practice. Avoid using a complex filing system. Using free rental property management software allows you to manage all the records. You can access all of your records even on your smartphone. Though a digital filing system offers everything you need, it is good to have a physical filing system as well. You can have a four folder system having the first for tenants-related paperwork, second for legal paperwork, third for all the receipts and fourth for everything else.

Not Having A Business Account 

It is not easy to separate your business and personal expenses for one long year. This is very time-consuming. This becomes a problem when it comes to filing taxes. Keeping separate accounts for business and personal expenses make it easy and also saves a lot of time. 

Using Business Accounts For Personal Expenses 

Tax filing is not the only reason for separating personal and business financial transactions. Depending on the type and size of your business, tax agencies offer tax benefits. For this, you have to show that you are actually running a business. 

Another reason is the accurate calculation of profit or loss. By keeping a separate record of business expenses and earnings, you can easily see how well your business is growing. 

Ignoring Books All Year Long 

Even if you find it arduous, you have to do books. It is vital to take care of the bookkeeping. You have to do it regularly. Always enter your income and expenses. Reconcile your books monthly. If you start doing it consistently, you can easily get used to it.  

Not Using Rental Property Management Software 

Free rental property management software does not only make bookkeeping easy but also automates a lot of day-to-day tasks. Depending on available features, rental property management software provides you with the following benefits: 

  • Lower operational costs 
  • Easier collaboration 
  • Robust security 
  • Easy scalability 
  • Simple backup and recovery 
  • Increase happiness levels 

It is important to treat it like a business. Right now, you might find it tedious. However, at the end of the year, you will be much happier. So, avoid all these mistakes. Most importantly, invest in free rental property management software. Make sure that it is a cloud-based software.  

By admin

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