The Best Beginner Tips For Paperless Rental Accounting

Picture this: You’re a landlord or property manager who has decided to switch over your books to accounting software for real estate management. You’ve researched to find the platform that fits best with your company, you’ve made your decision and purchase, and now you’re logged in, staring at the home screen. What next?

Rental accounting software can be tricky to learn and get comfortable with, especially if you’re not experienced with the bookkeeping aspect of running a business. That’s why we’ve compiled a list of beginner tips for accounting software rental property users. In this article, we’ll cover five tips for starting out with real estate accounting software to help you manage your finances with ease.

Tips for Using Accounting Software for Real Estate Company

Accounting software for real estate company clients is different from general accounting software. It’s built with landlords, real estate investors, and even real estate agents in mind so you have all the specific reports and tracking features you need to run your business, but that doesn’t mean that using it won’t come with a learning curve. After all, accounting and financial management are no simple tasks—even before technology gets involved.

If you’re one of the many property management companies or real estate professionals looking to master the art of using rental property accounting software, here are five of the best accounting software beginner tips to help you get started.

1. Connect a Separate Bank Account

One of the best tips for using rental accounting software is to make a new, separate bank account for your business and connect it to the software of your choice. By connecting a bank account to rental property accounting software, your transactions can automatically integrate with the platform for up-to-date, accurate tracking of income and expenses.

It’s important as a business owner to keep your personal and business finances separate. This is true for several reasons—for one, mixing your accounts can cause confusion and cost you time, as you’ll be forced to filter through your grocery purchases and Target runs to find tenant rental payments and maintenance expenses. Additionally, by keeping your accounts separate, you can distinguish between deductible expenses more easily and can spot problems with late payments or overspending faster.

Making a new bank account is affordable or even free, so take the time to separate your finances into either a business account or even several accounts organized by property.

2. Get Comfortable with the Software’s Offered Features

Accounting software for real estate management offers many accounting features that you can take advantage of (though you don’t have to use them all to properly manage your finances). Rental accounting software can include features like income and expense tracking, receipt storage, integration with property management software, automatic transaction records, tax report generation, and more, but it can be difficult to know what will be most helpful for you.

To become a proficient user of landlord accounting software, you must first understand what the software is capable of. Each accounting platform may offer a mix of these different tools and features, so make sure to research which features fit your company best before you make any purchases. After making a decision, take the time to poke around on the software and test out various tools to get comfortable with the abilities the software grants you.

3. Utilize Automation and Streamlining Tools

One of the best ways to get the most out of your real estate accounting software is by utilizing as many automation and streamlining tools as possible. These features are designed with residential and commercial real estate landlords and their businesses in mind so that you can manage your company’s finances without manual number-crunching. The more essential accounting tools you choose to take advantage of, the less manual work you must do and the more up to date and accurate your books will be.

By streamlining tasks such as transaction recording, Schedule E report generation, KPI tracking, and more, you’ll be able to put your energy toward cultivating a great living experience for your tenants instead of hunting for payment receipts and scratching your head about possible tax deductions.

4. Understand Financial Metrics and Patterns

Your accounting software rental property platform will likely be equipped with a slew of metrics and reports about the financial health of your business, but the numbers can only do so much if you don’t understand what they mean. To optimize the profitability of your rental business, you’ll need to spend time researching and diving into the metrics your software provides.

By taking the time to learn about crucial KPIs and metrics your software offers, such as your NOI, cash flow, or cash-on-cash return, you’ll be better equipped to adjust your approach and spending to increase your returns and grow your business.

5. Conduct Monthly Financial Reviews

Finally, it’s important to check the financial outputs of your software to ensure that it’s operating correctly and tracking your books in a way that’s helpful to you. Especially as a landlord or property management professional new to rental accounting software, it can be beneficial to conduct monthly reviews of reports, metrics, and even specific transactions to become more comfortable with the financial aspects of running your business.

By checking up on your accounting software for rental company, you not only learn financial basics but also ensure that you’re correctly managing your books and that the software is running as expected. This way, if you spot an issue in your books, you can fix it quickly and address the issue with the software before it becomes a larger problem.

Conclusion

Understanding the basics of bookkeeping and accounting for your real estate business can be a daunting task, especially when software is thrown into the mix; however, with the above tips, consistency, and some practice, you’ll be able to quickly conquer income, expenses, and tax deductions like a pro. Consider trying out real estate accounting software like Ledgre to start putting these beginner tips into practice.