Real estate is a unique industry. There is plenty of opportunity for growth that depends on how well you manage the array of transactions that go through your business. Organization is critical in making the most of your bookkeeping and maximizing your profits, regardless of the size of your operation.
Here are a few of our tips on how to perform real estate accounting.
1. Choose a Method
Some businesses are required to use one method over another, while others have the option of using accrual or cash-basis methods for their bookkeeping. Each offers a different approach to accounting for real estate development.
Cash basis involves recording one entry every time cash is exchanged, while accrual creates two equal entries and records them when the cost is incurred, such as during an invoice, as opposed to being received or sent.
2. Set Time Aside Each Week to Review Finances
Staying on top of your money is essential. Plan on spending some time to go over your records, reconcile your accounts and understand where your money’s going to be. Talk it over with your accountant or business advisors.
3. Separate Personal and Business Accounts
This task is a simple one that can make your life much easier. It will make tax season significantly less daunting and it helps you stay organized.
4. Know Your Laws and Codes
Different regions have different implications for a real estate business. Administrative codes can vary, as well as local tax laws. Study up on them and ensure you abide by the regulations that apply to your company.
5. Maximize Your Tax Deductions
It might sound straightforward, but if you have a thorough understanding of possible tax deductions and write-offs, you may be able to reap the benefits and gather more revenue for growth. Your home office, work computer and gas costs can all earn you a higher refund at the end of the fiscal year.
6. Know Your Workers
If you frequently work with contractors, office employees or repair technicians, you’ll need to know how their status fits into your bookkeeping. For employees, you’ll need to pay employment taxes, including the portion withheld from their paychecks. Contractors, on the other hand, are responsible for their own taxes, so you won’t pay these.
Knowing which category your workers fall under can save you from penalties, back wages and other adverse results.
7. Work With an Accountant
Let’s be honest — you’d probably rather spend your time managing your properties than managing the books, especially if you’re not well-versed in accounting for real estate transactions. Partnering with an expert can help you maximize your profits and stay organized so that you can grow your real estate investments further.
We can help with that last one. When you are running a company in Atlanta, your focus should be on the task at hand, rather than the bookkeeping. Let Marshall Jones handle your real estate bookkeeping services. Contact us today to start working with one of our certified public accountants and advisors!