This year, 75% of Americans plan to file their own taxes. While this could be a good money move, it's risky without the right knowledge.
Mt. Laurel, New Jersey, landlords considering doing their own business taxes first need to understand rental property accounting. Keeping your bookkeeping in order is the best way to maximize your income.
Keep reading to learn rental property accounting tips that can help.
Open a Business Account
Owning an investment property is a business opportunity. You need to open a business bank account to manage your finances.
Commingling your business finances and personal finances can cause major issues in the bookkeeping process. When it's time to file your taxes, you'll have a hard time separating your income and expenses.
Additionally, if you have more than one rental property, open an account for each of them. Keeping your financial data separate will help you do your taxes and more.
For instance, you can see which properties are making you the most money with a simple review.
Track Income and Expenses
With separate accounts for your rental properties, you can track your income and expenses with ease. To streamline the process, choose a reliable system for financial tracking.
Rental property accounting software can be helpful, but there are many options to choose from. You can work with a property manager who will recommend the best option or you can do your own research.
It's always best to go digital regarding rental property bookkeeping. Manually tracking income and expenses can get messy and confusing. Consider online rent collection as well.
Investing in accounting software provides a central location for your business finances.
Utilize Past Financial Data
A rental property accountant can help landlords use past financial data to their advantage. Take a look at when your rental property expenses increased during a certain period. Using this information, you can plan ahead of time for the increase.
Set a portion of your rental income into a reserve fund or savings account every month. This will act as a safety net when unexpected expenses arise.
By accurately tracking your income and expenses year after year, you'll gain more financial data.
Learn About Tax Forms
Rental property tax season can get confusing for landlords. Most commonly, you'll need to familiarize yourself with W-9 and 1099 forms. Both are important for recording income and employee payments.
Understanding these forms can streamline the employee onboarding and rental property bookkeeping process.
If you hire a property manager with accounting experience, they will have knowledge of these forms. You'll have peace of mind knowing your taxes are being properly handled.
Tips for Rental Property Accounting Success
Mt. Laurel, New Jersey is a great place for landlords to make money. However, you need to know how to handle rental property accounting.
PMI Garden State is a professional property management company providing financial services and more. With over 20 years of industry experience, we make it easy to keep tabs on your investment.
Our specialized accounting staff can maximize your income and minimize expenses. Contact us today to learn how we keep your financials in order.
