Note that whether you are an independent contractor or part of a large brokerage firm, streamlining your monthly or quarterly workflow is essential. This is because it will allow you to manage your time better, track large expenses and payments, and prepare yourself to meet all your tax obligations. It is no secret that the main goal of real estate accounting is keeping a reliable and accurate record of all the money coming in and going out of your business.

Accounting is one of the vital tasks for your real estate business. Did you know that there are many benefits to staying organized, like legality, freedom, and profitability? Therefore, all professionals in the real estate business, such as brokers, need a strong and comprehensive understanding of the accounting process in order to improve their bottom-line growth.

These are some of the best accounting tips for real estate professionals.

Streamline Your Chart of Accounts

Note that despite tracking pricey marketing budgets and large sales, the chart of accounts that you need to effectively manage your real estate business is quite simple. Did you know that you need a reliable chart of accounts in order to record as well as organize all your accounting journal entries? It is worth noting that a chart of accounts is important as it lists every real estate transaction that you make.

And the best thing is that you may use the chart of accounts in order to create reports, locate historical transactions, and measure performance. So, it is important to make sure that you have expense and income categories for these items:
– Real estate association fees and dues
– Office expenses
– Education expenses
– Marketing and advertising expenses; and
– Commission income

Although you may always add a few more accounts, usually, these are the key income and expense categories that you will need to effectively track financial activity and gauge the financial health of your real estate business.

Of course, you can always create some subcategories within these accounts in order to reflect more accurate and granular data. This is because it is often better and prudent to have more information in the form of financial reports throughout the year as it will help you make important business decisions. It is important to update your chart of accounts regularly for accurate and reliable records.

You should also ensure that you record every financial transaction and then calculate the correct balances for every account.

Reconcile Your Bank Statement

Each month, go through your paper statements carefully and then check them against the amounts recorded in the accounting system. Did you know that the main purpose of bank reconciliation is double-checking everything in order to make sure that your books are accurate?

You may know that sometimes banks make mistakes, and you will be charged for items you did not buy. Also, note that you could get double-charged. This is why it is important that you check to make sure that you have not missed any entries.

Know Common Accounting Terms

There is no doubt that accounting jargon can often seem like another language. This is especially true if you are not familiar or well-versed in business accounting. It is worth noting that terms such as balance sheet, accounts receivable, cash flow, accrual, ledger, and Return on Investment (ROI) are not words and terms that usually grace everyday speech.

This is why it is important to learn all the basic business financial and accounting terms and what these terms mean.

Track all Receipts

You should keep every receipt as well as designate which property the specific receipt was for. A good practice is to write the property description and the purpose of identification on the receipt. Keep in mind that this is not just helpful in deducting the correct amount at tax time—as well as proving to the tax authorities that you are legitimate—but it can keep your business finances organized as well.

Note that when you are starting, one of the most important habits is to track and adequately categorize everything, even if you do it on a simple spreadsheet. This can build a firm foundation to expand on when you decide to get more advanced.

Software for Automation

Accounting software is essential to ensure that you receive payments, track your expenses, process payroll, as well as stay current on your tax obligations. There is no doubt that the time you save is well worth the time and cost incurred on learning the latest technology and incorporating new and improved habits into your daily routine. It is worth noting that when it comes to keeping your books, simplicity is the best.

In many cases, purchasing a fancy and complicated software program creates more confusion and frustration. So, it is best to purchase a simplified accounting software program. The good thing is that there are many software options out there that can help you create an effective chart of accounts while meeting all your needs.

Claiming Deductions

Did you know that Schedule C is important, and it can lower your self-employment income tax? In most cases, real estate agent income is usually claimed on a Schedule C. So, for instance, if you’ve a home office, you can take a deduction for that home office. Note that this will transfer some of the mortgage interest to Schedule C from Schedule A, thus, lowering your self-employment income tax.

Final Thoughts

Whether you like to track your finances on your own, with the help and guidance of an outsourced accountant, or via an online system, keeping updated with your real estate accounting is an important activity that is integral to monitoring and improving the financial health of your real estate business.

And to make it less confusing and daunting, it is best to educate yourself and prepare for the task ahead. And you may also seek professional help or get a software program that makes accounting quicker and easier for you. With user-friendly and simple accounting solutions available to real estate businesses of all sizes, you should get started as soon as possible.

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What then can you do to control the situation? It is important to keep an accounting record so you can hold yourself accountable for every dollar spent. 

Accounting Books defined

In simple terms, an accounting book is where all records of your account go. Whenever a transaction is being made, and you got paid, the account book is where you do the writing. The importance of keeping an account book for your business cannot be overemphasized. It gives you a clear view of everything going on with your service. When coupled with other books you need to keep, it helps you stay on top of your freelance game, making an organized career, as much as possible. With account books and other books you keep, you can carry out frequent appraisals and make necessary decisions.

Why you need to care about having an account book

It is easy to dismiss the idea of having an account book, or you rely on your IQ that you can have it all stored up without mixing things up. Well, before you decide on whether you need an account book or not, here are some things you need to know:

Account books help with tax matters

In a world where famous footballers can be jailed due to tax defaults and all, you don’t want to mess around with the tax enforcement agents. In the bid to avoid tax issues and all, if you have enough money, you may be tempted to have a tax accountant do all your accounts for you. This is only going to cost you more. You can keep things in check and order just by entering records as and when due. You don’t need to pay extra hundreds of dollars to have your files clean and in order. With a properly managed account book, paying your tax will be more comfortable.

Audit becomes easier

You are a business owner; you work for no one, so no external auditor is going to check your records. However, you need to audit yourself from time to time. When you have a proper record, it is easy to determine how well you are faring, and how to maximize your time and resources for better performance. When your book is managed correctly, you do away with financial mistakes. If you don’t know how to handle a proper account book, read on..

You can monitor your assets and protect them

As a freelancer, there is a need for you to invest in having assets. Though this is a topic for another day, with the account book, including all your assets and liabilities, you can quickly know when things are going wrong. The account book helps you stay on top of this.

Tips to keep your account book perfect and organized

Keeping an accounting book is more than just entering text when you get a credit alert, or when you are debited for payment. There are some tips that we have curated to help you make the most of the account book.

Make sure your personal and business bank accounts are separate

You don’t want your money to be up for tax, do you? It is best to run different accounts for your business and personal finances. With this done, tax deductions can be levied on the business account. Don’t mix up financial details relating to business with your personal finance. This is necessary, and it will make things easier for you and also save you from tax enforcement.

Don’t use cash for bills

Whenever you can, do not use some money to sort bills. It may be tough to track this. In cases where you do, it is best to reimburse where the cash came from. Whenever you can pay via bank. Rather than having to keep receipts of transactions, bank statements will come in handy.

Separate the records for payable and receivables of the account

When you have a separate record for receivables, you can keep track of how much you should be expecting from a client, and when. You keep a record of the name, what he is going to pay you for, and when he promised to. This way, you can chase payment when due. One thing you should note is that your clients should always pay on time.

Also, you should keep a payable account, where you keep track of all the expenses you need to incur and when. This way, you don’t get things mixed up or duplicated.

Leverage technology

You don’t have to record all these in books and papers. They can get lost and worn out easily. Your very best bet is tech-related products. There are several accounting software out there, and you can pick any that suits your needs. One thing about leveraging on tech is that you don’t ever have to worry about losing those details. There are backup utilities you can tap into.

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Accounting and bookkeeping is not everyone’s passion, and that’s why tools like Booxkeeping come in handy – it does all the legwork for you! From bookkeeping functions to transactional processes, you’re able to keep track of what’s ahead for the financial year and analyze what kind of profit you’re turning.

Here are 4 of the most common small business accounting challenges faced today and how to overcome them with efficient bookkeeping and accounting software.

1. Taxes

None of appreciate the time of year when business taxes are due, but with accounting software like Booxkeeping you can know where to start, stay on track of what you need to submit and find out which items are tax-deductible. For example, if your small business operates out of your home, home office deductions will count. The accounting software you choose should ultimately help get your financial records to the point where you know exactly what’s going on when it comes to tax time without investing extra time or effort.

2. Managing Your Payroll

Performing many functions such as HR or payroll sometimes means you’re covering a lot of ground at once and having to figure out things like social security and Medicare. However, payroll is a critical issue and plays a big overall role in the overall organization and happiness of your employees. Issues such as incorrect tax filing and overdue payments can hold you back from running your business in areas you’re needed. Read up on guides and take the time to see how accounting software can help you avoid these problems.

3. Keeping On Top Of Costs And Expenses

Though keeping on top of cash flow and expenses are probably the most important part of getting your small business going, it’s often perceived as a burdensome task. These days, keeping paper receipts in endless files are no longer needed – comprehensive accounting solutions can help you track where your money is going. Find out more here.

4. Analyzing Finances

Taking a broader look at your overall finances and making business decisions based on spending and income patterns contributes to long-term business health. We advise you do this in three steps: interpret, analyze and then advise. It’s not enough just to have numbers – it’s the evaluation you draw from it to move forward which is important! What do your numbers mean? How can you improve them? Accounting software can help you leverage insights from your financial data and help you stay more informed, enhancing your position in the market with greater data visibility.

Small Business Bookkeeping Made Easy

Bookkeeping services offer great alternatives to having full-time support on your team.  This means you can ultimately get back to focusing on what you do best and ensure your small business financials are being successfully tracked. Find out about basics of small business accounting tips here.

Ready to get started with your small business accounting solution? Get your quote here.

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As a business owner using QuickBooks for your accounting purposes, you may be under-utilizing its potential if the QuickBooks Income Tracker feature is lying fallow. As one of the software’s most innovative features, it offers a lot of benefits and addresses many challenges faced by business owners using the older versions of the software. These include the necessity of using Collections Report, A/R Aging Summary, and Open Invoices Report just to view various categories of reports. This easy-to-use yet data-dense dashboard takes care of these issues while enabling users to carry out quite a number of tasks such as batch procedures as well as billings and collections.

Two major benefits of using the QuickBooks Income Tracker feature includes:

Enhanced Functionality
QuickBooks Income Tracker takes the pain out of viewing groups (or batches) of transactions. Users can drill down for more information by simply double-clicking on the specific transaction to open its original form.

More Flexibility
QuickBooks Income Tracker permits users to create new transactions without having to leave its environment. This is as simple as clicking the ‘manage transactions’ arrow to display the options then selecting ‘create new’.

Taking advantage of the above benefits enables the business owner to do the following and even more;

1.Print a transaction: Sending a specific transaction for hard-copy print is as easy as clicking the print option within those provided.

2.Send transaction by email: Users can also send a specific transaction by email to another person without leaving the Income Tracker environment.

3.Batch-print transactions: One of the most sought-after features, QuickBooks obviously listened to feedback by fine-tuning and including this function. It cuts out the previously onerous process of opening individual transactions then selecting the print option. Simply select the category of invoices to be printed from the ‘batch actions’ list then print directly.

While some may argue that QuickBooks Income Tracker functionalities can be accomplished through a combination of actions, the fact remains that, rather than mix and match actions to produce a result, the feature enables users to achieve the same result with a single click or two. It is a win-win for users and their business.

For more information on how an outsourced bookkeeping service like BooXkeeping can make your life easier click here. 

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Importance of a Good Balance Sheet Solution

According to a Forbes.com, almost 50% of companies fail within four years of starting out. Corroborating this assertion, Dawn Fotopoulos, Small Business expert, and author, says success in small business begins with understanding the balance sheet. By using a balance sheet solution, small/medium scale business owners can generate business balance sheets and leverage its benefits to grow their businesses. These benefits include providing an overall picture of the company’s financial health as well as detection of early warning signs of potential pitfalls. In addition, it captures the overall value of the business

Ratios Speak Louder Than Words and Numbers

A versatile balance sheet solution will typically reveal the key ratios which determine the strength of a balance sheet.

Current/Liquidity Ratio: Dividing current assets by current liabilities gives us the current ratio. It is an indicator of a company’s ability to repay short-term liabilities using short-term assets. Generally, if the ratio is below 1, it indicates the company’s inability to meet obligations with its current liquidity.

Debt Ratio: This is derived by dividing total debt by total assets. If the ratio is below 1, the company’s assets exceed its debts. Thus, the lower the ratio, the stronger the balance sheet.

Debt-to-Equity Ratio: This is an indicator of the company’s leverage and is derived by dividing the liabilities by shareholder equity. Generally, the higher the ratio, the weaker the balance sheet.

Snapshot of a Winning Balance Sheet

Key features of a winning balance sheet solution include the following: Optimum working capital:

Optimum working capital

Positive cash flow

Balanced capital structure

Income generating assets

A successful small business is one that has gained a good understanding of its balance sheet and constantly leverages it for sustainable growth. For more information on how a balance sheet can be maintained for you without you having to do the work click here for your free quote today.

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