Blog

Importance of Accounting in a Real Estate Business


28th June 2015 Facebook Twitter LinkedIn Google+ Real estate Investment


Real estate accounting

Share with:


You might be wondering why accounting is an important aspect of real estate investment business. If you are to ask 10 business owners if accounting for their business is important, 9 of them will definitely say yes. This is because good accounting produces a good report which will be used for decision making. It will make you know if you are achieving your set real estate business goals. Here are some tips to help achieve good accounting:

1: Practice Purposeful Accounting

Accounting should not only be done because it was mandated by a regulatory agency to do so. It should be done solely because it will provide accurate information necessary for decision making. Some businesses go worse because they thought accounting is solely done so as to enable relevant agency deduct tax.

A good account of your business will provide you information to help you decide when to buy, sell or renovate your property. You be able to know your property that is doing well and the one doing otherwise. You will also know which of your property manager that is doing best.

2: Keep Accurate Record

Although, accounting goes beyond keeping records, it begins with accurate bookkeeping. It is the basis for making analysis and preparing useful reports. It is simply a process of keeping records of transactions in such a way that can be used for analysis and reporting. You can use accounting software like Intuit, Sage or use Google search for various bookkeeping software available on the internet. I do recommend hiring an accountant when it comes to large scale real estate business. Make sure you have a detailed data in your record and remember you can only create a report or make decision from the data in your records.

3: Be Consistent

Make sure you use the correct record for each property you are accounting for and use the same format for similar income and expenditures.

4: Be Frequent

Input all data into the record for at least once a week so you won’t get behind. It becomes overwhelming when you get behind and it will continue to pile up until when it becomes urgent for a specific use. This will also create a problem of not having an updated record which cannot be used to make accurate report for decision making.

5: Use Online/Mobile Banking

Data recording is best done on a Friday morning. It will take less time if you use online and mobile banking for your transactions. Some accounting software will automatically generate a typical record from your transaction alerts, statement of accounts or simple copy and paste process. You will find it easier than using the manual input process. You will be able to prepare records quickly, make quick reports and make faster and accurate decision using this platform.

 

Comments