Accounting for Property Managers: Beginner’s Guide 2024

The intricacies of property management accounting require a tool that is not only powerful but also specifically tailored to the unique needs of property managers. Property management accounting is the process of recording, classifying, summarizing, and reporting all financial transactions related to rental properties. Effective accounting practices are crucial for property managers, as they allow for better financial control, informed decision making, and proper reporting to ownership.

If you’ve spent time in property management, you’ve likely had the same stressful moments (or weeks) that I’ve had. However, accounting for your properties doesn’t have to be an earthquake-level trauma. When you have a strong accounting system, it supports and safeguards your investments by properly tracking your revenue, expenses, and total profitability. Without this granular clarity, there can be endless mishaps in decisions that can quickly consume your returns. This includes any individual or unincorporated entity you paid more than $600 for services related to your rental properties, such as a plumber, painter, landscaper, etc. When you operate rental properties as a business, you are subject to some unique tax rules and regulations.

Importance of Accurate Accounting in Property Management

That means separating your personal and business finances by opening a business checking account. Here’s how to get your property management accounting off the ground. You’ve put in the sweat equity to make your rental property a reliable source of revenue. But to properly take care of your investment, you need an accounting system.

The key is to make a decision in the beginning and stick to the same method throughout. Within this method of accounting, income and expenses are entered the instant they happen. Whether the money has made it to the business checking account yet or not makes no difference. Tasks that take hours to complete each week or each month can be automated to be completed instantly, with greater accuracy and more thoroughly. The time saved by not doing manual accounting can be better used to manage the human elements of property management, like dealing with tenants.

How to Set Up Your Property Management Company Accounting System

The good news is that there are plenty of great solutions available to help you better manage your rental properties. They range in features and functionality, but the best, like Landlord Studio, will help you manage your rental property accounting and allow you to streamline regular property accounting for property management management tasks. These advanced landlord accounting and reporting features are paired with a suite of property management tools, including online rent collection, rental listings, and lease management. These features save you time by automating workflow and centralizing information.

Using a personal account for your property incomings and outgoings is a surefire way to get things muddled up when it comes to reconciliation. Make sure the accountant you hire has the necessary credentials to do the job. They should have a degree in accounting or finance and be licensed to practice in your state. Reviewing and adjusting your budget regularly is essential for ensuring that it remains accurate and up-to-date. You should review your budget at least once a year and make adjustments as necessary. Here are some steps you can take to manage your finances more effectively.

Part II: Your Property Accounting Software Questions: Answered

They are in charge of accounting, asset management, and bookkeeping duties, to ensure you’re tax compliant and your books are accurate. Tenants can sign leases, manage requests and pay rent online, while property managers can access property management tools on the go on any device. TenantCloud has the ability to track rental information, accept and send payments, manage leases, maintenance, and tenant communications, as well as insurance tracking and data import/export.

Create separate accounts for each property you manage within your accounting software. This allows you to track income, expenses, and other financial details specific to each property. As opposed to strictly accounting software, DoorLoop’s property management software gives you tools for managing your full suite of accounting that allows you to integrate your entire operation. The accounting method you choose will depend on how you’re most comfortable tracking and reporting income.