Ohio has one of the most dynamic real estate environments in the country. That is promising for investors, but it also means stiff competition. Property owners need to leverage every tool to ensure they are getting the most out of their venture.
This includes astute accounting practices. Unfortunately, this is something that often gets put on the back burner.
This article covers four must-knows about rental property accounting practices in Massillon, OH. Keep reading for some tips on financial management for rentals so that you can get the most return from your investment.
1. Keep Separate Personal and Business Finances
Regardless of how small your real estate business is, there are many advantages to keeping separate personal and business finances. This is true for both income and expenses.
It helps simplify tracking, which can be important for tax purposes. It also gives a more accurate glimpse into how distinct properties are performing in any given period.
It can also help on the personal side. Doing regular owner disbursements means regular, predictable income for everyone involved.
2. Maintain Accurate Records
Another rental property accounting tip is to keep detailed records of all income and expenses. Break down rent payments and security fees. It can also be helpful to categorize expenses into:
- Marketing and tenant placement
- Maintenance and repairs
- Property improvements
- Taxes
- Insurance
- Utilities
If necessary, use real estate accounting software to track these details with precision. These programs can also be useful for ensuring accuracy and simplifying reporting.
3. Prepare for Tax Season
One of the best things anyone running a real estate business can do is to start preparing for tax season early. You need to familiarize yourself with available tax deductions, so that you are not paying one more dime than you have to. In most cases, things like depreciation, mortgage interest, and maintenance expenses can be written off.
Other things, like energy-efficiency improvements, can give you access to tax credits. The legal structure of your business can impact taxes as well. If you have kept detailed records of income and expenses, doing taxes will be much less of a headache.
4. Hire a Professional
If any of that advice sounds daunting to you, there is one last recommendation that you should consider: hiring a professional. Allowing a qualified property management company to track and report all financial details of your business can improve accuracy and diminish stress. It can free up time for you to pursue more important aspects of your business.
Learn More About Rental Property Accounting
Rental property accounting requires some time and effort, but doing it well can pay dividends down the road. Following the landlord accounting advice above can ensure you maintain a clear financial picture of your rental property and make the most informed decisions for your investment.
At Stewardship Management & Realty, we leverage decades of real estate management experience to offer high-quality services, including budgeting, accounting, and financial consulting. We also provide many internal services, such as storage of bulk maintenance items and in-house brokerage. Reach out to us today to learn how we can help with accounting or other property management tips.
