In 2023, the IRS levied $7 billion in penalties, according to New York Post. Most of those hit were business owners, investors, and others who typically don't withhold federal income tax payments from their checks. You could face the same if you fail to provide supporting evidence regarding the items you report on your tax returns.
So, if you haven't been paying careful attention to Orange Beach rental property accounting tasks, you should start doing so immediately.
To help you get started, the experts here at PMI Integrity Properties have shared the top real estate bookkeeping and property management accounting tips.
Maintain Separate Records for Each Property
According to Bankrate, individual investors in the U.S. own 70% of rental units. While many own just one property, others own two or more.
If you belong to the second group and own multiple rentals, separate their records. Doing so can help simplify:
- Rental income tracking
- Landlord financial management
- Organization of supporting documents for tax returns
Sub-Categorize Records
To further simplify accounting and bookkeeping, create primary folders and subfolders for each class of accounting record.
For example, one of your primary folders could be for financial transactions. You can then sub-categorize them into subfolders based on what the transaction is for. For instance, one sub-folder could be receipts for rental payments, another for your tenant's utility bills, and another for vendor and contractor payments for property maintenance and repairs.
Label each primary and subfolder for easy classification and to quickly find records without sifting through many documents.
Use Rental Property Accounting Software
Accounting software for rentals is a computer program that can help with many bookkeeping and accounting tasks, such as:
- Expense tracking and management
- Tax reporting advice
- Rental payment tracking
- Creating electronic rental payment receipts
- Generate financial reports
- Reporting and analytics
The best rental property accounting software programs also have additional features that allow you to automate tasks. For example, they may allow you to create and automatically send rental payment reminders and lease agreement renewal notices based on pre-set dates.
Hire a Property Manager
The simplest way to keep your accounting records organized and accurate is to hire a full-service property manager with a professional accounting team. They'll help you stay on top of your finances by tracking your rental property's income and expenses, including:
- Rental payments
- Utility bills
- Vendor and contractor bills for
- Security deposits and disbursements
At PMI Integrity Properties, we'll take things further by giving you access to an online portal. The platform will let you access your monthly owner disbursements and statements, tax statements, and 1099s.
Let PMI Integrity Properties Help With Your Rental Property Accounting Tasks
As critical as accurate rental property accounting is, it's a tedious, time-consuming tax that can also be complex, especially for first-time landlords or those without an accounting background.
So, if you want to ease the burden of doing the math and crunching numbers for your rental property in Orange Beach, consider partnering with PMI Integrity Properties. We'll use our state-of-the-art technology, accounting expertise, and the support of PMI, our parent company with nearly two decades of property management experience, to make accounting and financial reporting a breeze for you.
Connect with us today to learn how we can help you with a free property consultation!