After Texas, Florida was the top state for new residents to move to in 2023. As Florida gets more crowded, there is ample opportunity for real estate investors to profit.
Buying and renting out a property isn't enough to make considerable passive income. Dunedin, Florida landlords need to build a rental property accounting strategy to ensure their business stays booming.
Keep reading to learn the best tips.
Open a Business Bank Account
Your rental property is a business so you'll need to open a business bank account. Using your personal credit and debit cards to make business expenses or receiving income through your personal bank account is not ideal.
For your rental property accounting records to be accurate, you need to separate your business from your personal finances. This keeps your business organized and can help during tax season, especially if you get audited by the IRS.
In Florida, you cannot mix security deposit funds with other funds. You can choose to open a standard or interest-bearing account for security deposits, according to Florida laws.
Track Income and Expenses
Rental income determines whether or not you have a consistent cash flow. If you want to get a holistic view of how your property is performing, track your income and expenses regularly.
When you track expenses and rental income weekly or monthly, you don't have to worry about things piling up over time. Create a system that works for you, or consider working with a property manager with accounting experience.
Digitize the Process
Accounting software for landlords is popular for many reasons. First, it's easy to keep things organized and avoid losses. Second, some programs can create financial reports based on the data collected.
Digitizing your bookkeeping process declutters the office and prevents manual errors. Manually tracking income and expenses is a time-consuming and outdated process.
If you want to share your rental data with property managers or other professionals on your team, choose a cloud-based software.
Prepare for Tax Season
It's never too early to prepare for tax season. Accurate rental property accounting records will help make paying taxes a smoother process.
Additionally, accurate recordkeeping can help you make better business decisions. You can prepare for future expenses using your past financial data.
For example, if you notice your maintenance and repair costs increase in a certain month, set aside money to combat that increase.
The longer you track your expenses, the more accurate your financial history will be.
Make Rental Property Accounting a Breeze
Rental property accounting is complicated for those who are new to running a business, and even for some seasoned business owners. The best plan of action is to outsource your accounting to professionals.
At PMI Palms, our full-service rental property management team has been working in the local Dunedin, Florida, area for over 20 years. We treat your investment like our own by utilizing the tips in this guide and more.
For comprehensive financial reporting from a specialized accounting staff, choose PMI Palms! Get in touch with us today to get started.
