The biggest accounting DON’T for Landlords living life in the fast lane.
I have a soft spot in my heart for Real Estate professionals who are challenged by the plastic in their wallets. You can tell when a person has a lot on their plate when they go to the register and use the wrong credit card to pay for a client lunch meeting. If you saw my recent article “Thoughts and perspectives… speaking from the heart”, you know I can relate to the painful side effects of multitasking.
Landlords and Property Managers aren’t the only ones multitasking their way into mixing personal and professional activity. Many bookkeepers agree the Real Estate industry has quite the reputation for this though, which makes the review of financial statements much more complex.
Problem 1: Using one credit card for personal and business use
The biggest accounting DON'T, outside of those legal/real estate accounting no-nos, is mixing personal with business.
A credit card for business and one for personal. Keep them SEPARATE! Do not intermix transactions. I sat in an audit one time where the landlord had used one credit card (his business one) with laced with personal charges and the auditor denied all the expenses, even the legitimate business ones!
Real Estate Accounting isn’t particularly hard, generally speaking, but it can be fraught with challenges brought on by a Property Manager or Landlord/Owner who’s disorganized spending habits affect both business and personal accounts. How are you going to make great decisions about your company, if you’re unable to pull a crystal clear report? It’s like exclaiming:
Problem 2: “My business is on fire!”
...only to realize later that it’s on fire in a very, VERY bad way. Very bad; because disorganized financial activities out in the world are misrepresenting your level of success on paper. The graphic below cracks me up… she so devious...anyway...
If you’re saying things like:
“Business has really picked up” or
“I’ve closed so many deals this month” or even
“where is all the money? ...I should be rolling in it, with all the business I did these last months”...
you are in an excellent position to enhance your bottom line. Real Estate Accounting professionals take you from “My business is on fire (in a bad or confusing way)” to “My business is on fire in the best possible way!”.
The Solution: Don’t get sloppy, GET a professional Real Estate Accountant.
By simply turning on the merchant services feature in QuickBooks, emailing invoices so that tenants can pay electronically and sending regular reminders for rent, the job of rent collection became a thing of perfection! The tenants flocked to the automation (it is safer than mailing a check). This simple change of using technology saved the client the Landlord hours of recording the tenant payments and deposits. For a firm with 400+ units, the time-savings is astonishing! Extra bonus: Reminding tenants each month with an invoice significantly lowered the amount of late payers. Less need for a 5 day demand for rent letters. Less chasing. Add to that, the new feature of multiple invoices and you can quickly send out a batch of late fee invoices with a few clicks!
You know the moral of the story on that one…
Don’t get sloppy, GET a professional Real Estate Accountant.
Does that count as one “don’t” or two? Let me know what you think here, or come find me on Facebook. You can even comment with #dogetartesanibookkeeping LOL! Thanks in advance.