How to save Time & Money on Real Estate Bookkeeping
Something every real estate agent enjoys is being able to save some time and money. Finding the most cost-effective and efficient way to handle real estate bookkeeping and accounting is an integral part of doing this.
The first thing we need to do is explain the difference between accounting and bookkeeping. Many people like to interchange the terms and feel that they mean the same thing, but that’s not quite true. Accounting and bookkeeping together are two parts of the whole financial cycle.
Simple bookkeeping is keeping records of daily transactions for a business. It’s tracking the money coming in and out of business.
• Posting debit and credit card expenses
• Enter financial transactions
• Receive and record cash, checks, and vouchers
• Preparing initial financial statement, such as balance sheets, income statements, and totals by account
• Reconciling accounts and preparing reconciliation reports
Accounting, on the other hand, is a more advanced process. Accounting takes all the information gathered through bookkeeping and puts it in context by turning it into financial documents that offer insights about the business. Accounting takes what bookkeeping does and takes it to the next level.
• Make and evaluate budgets, revenue, expenses, payroll, invoices, and additional accounting documents
• Profit and loss reports
• Compute taxes, prepare tax returns and file taxes
• Analyse budgets and expenditures for local, state and federal
• Financial analysis of the company operational costs, determining savings, and analyzing financial data
• Formulate profit and loss statements and closing/cost accounting reports
• Filling out small business tax forms and returns.
• Suggest ways to reduce costs, enhance revenues and improve profits
So how can a realtor save time and money handling these two tasks that demand so much time and attention? Well here are some tips to help with bookkeeping for real estate agents and realtors.
Get it Done Right the First Time
If you are handling the accounting and bookkeeping for your own real estate business by yourself, then you should never take a shortcut thinking that it’ll save you some extra time and money. Make bookkeeping one of your regular habits such as checking your emails every day, or come up with some weekly goals you can stick to. Create a schedule for handling bookkeeping, at least once per month, and then set aside the time needed for the task. That way you can be sure that you have the time you need to get the job done properly.
Keep Every Record
If there were a golden rule for small business accounting, it would be to keep all records. It doesn’t matter if you’re keeping digital copies of everything or working with hard copy receipts, what matters is that you find a quick and easy solution for keeping receipts and financial records. Keep business receipts in a wallet, folder, or envelope in your office. If you want to go digital, then take pictures of receipts and upload them to apps like Hello Expense, QuickBooks, and Expensify.
Get Familiar with Accounting Terminology
There are times when accounting jargon sounds like an entirely different language, particularly if you aren’t too familiar with the world of business accounting. Terms such as balance sheet, accounts receivable, cash flow, ledger, return on investment, and accrual aren’t words we use in our day-to-day lives. Learn some of the more basic accounting terminology and what they all mean, and you’ll have an easier time taking care of your accounting.
Separate Business and Personal Accounts
The fastest path to financial headaches when it’s time to do taxes is having business expenses charged to a personal account or vice versa. Keeping the account for your realtor business separate from your personal account makes handling accounting much easier. It also helps to keep the professional image of your business intact. When it comes to the accounting at the end of the year, you want to look through your personal account to see if there are potential business deductions such as deducting a part of your phone bill or mortgage payments. Make sure that making business purchases through a personal account is kept to an absolute minimum.
Invest in the Right Bookkeeping Software
If you are going to manage business accounting and bookkeeping by yourself then you will likely need something more than the basic functionality you get with Excel spreadsheets. Do some research on the different accounting software solutions on the market and find a good option that matches what you need. There are even some solutions that are designed around realtors in particular. Even so, most should have plenty of success with general options like QuickBooks.
Hire an Accountant
With a little bit of thought and work, anyone should be able to tackle the accounting and bookkeeping questions that come their way. However, many realtors and real estate agents feel it isn’t worth investing all this time each month to manage their bookkeeping when they can focus their efforts on making money for the business. Rather than trying to get through everything on your own, you may find it better to hire a professional accountant and have them take care of the accounting for your small business. Not only does hiring an accountant to save you some time, but they can also actually save some extra money by finding business deductions that you might have missed, catching accounting errors you make and overlook, and offering advice on how to best save and invest money.
Bookkeeping.com offers accounting and bookkeeping services for real estate agents and realtors and provides unlimited accounting advice directly from real CPAs at the low price of less than $100 a month. Get in touch with us today as we’re waiting to hear from you and discuss your real estate and accounting inquiries.