One of the most important details in becoming a successful real estate owner and investor is accounting. Now, most successful real estate investors are pretty good with their money and understand cash flow in general. But figuring out how to price your rentals so that they will clear a profit each month, or figuring out how to keep track of all the cash that comes in and out with a real estate purchase, can get tricky. However, we’ve found the following tips to be very helpful:

Tip #1 Get Some Great Accounting Software. Computers are great at everything you need for good accounting practices.  Getting the right software package will help you keep track of your cash flow at different times of the month and help you figure out where you’re losing money. The three that we like best in order are, QuickBooks, NetSuite Financials and Intacct Financials and Accounting.

Tip #2 Nail Down a Specific Accounting Process. When it comes to accounting you cannot be too detailed and you need to nail down the details of each transaction—and devise a process that makes it easy to do so.  Systematizing your accounting process might take some work but once it’s done you will wonder how you ever functioned without it, especially if you have business partners that you need to communicate with.

Tip #3 Taxes, Deductions, Depreciations, and Exceptions. There are very few times where accounting will be more important than during tax time. This is one area where we strongly, strongly advise hiring a professional. The tax code for real estate can get pretty complicated pretty quickly, so you need someone who can make sure you file on time with all the proper documentation, and will get you all the deductions you deserve.

Tip #4 Filing System.  Accounting is all about the paper trail. You need to be saving receipts for tax deductions. You need to keep track of who has paid their rent on time and in full and who hasn’t. You need to know when property taxes are due for each property and you need to know when you paid them. Then there’s all the insurance paperwork on top of that. You need a great filing system to keep your paper from becoming a problem.  This video has some great tips to get you started.

Do you have accounting tips or tricks? What do you do to stay ahead of the accounting curve?

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