Commercial Property Management Bookkeeping Tips For Staying Profitable

Commercial Property Management Bookkeeping Tips For Staying Profitable

admin  /   October 22, 2021

Commercial Property Management Bookkeeping Tips For Staying Profitable

As a property manager, it is important to handle your income and expenses. This involves dealing with accounting since you need to ensure that the business will stay profitable. With payments coming in and out of your business on a monthly basis, there’s a lot of money that gets around.

Commercial property managers may not be keen on balancing their books or accounting for every asset they manage. But without a good accounting system, those managers will inevitably find themselves in the red. Here are a few commercial property management accounting tips to help you get started.

Make Sure the Collections Are Current

Sometimes the cost of late fees can outweigh the benefits and you’ll need to waive them. But there are certain moments when collecting on outstanding debt is more important, especially during a pandemic. Make sure to track any waived fees so you know what properties or tenants have been charged less and treat them accordingly, either by categorizing the property in the software or keeping a manual list. You should also keep a thorough process for waiving fees, so everything is fair to all parties.

Expect the Unexpected Expenses

Keeping a rainy-day fund can help you handle unexpected expenses without the added stress. Unlike an employer who usually pays for a sudden business expense, many people spend their whole lives paying for these types of unexpected bills that arise. Add up your previous-year expenses to figure out what you could save for the next year.

Regular Account Reconciliation

To keep your books accurate, it is important to reconcile your records at the end of each month. This will help you find any mistakes or missing information and identify bank errors earlier rather than later so that they can be corrected before they accumulate. A good commercial real estate accounting firm will help you get organized and could save you lots of money.

Monitor Your Cashflow Carefully

Even if your cash flow is positive, it doesn’t necessarily mean you’re profitable. In commercial property management accounting, not every cash outlay is an expense. When you refund a security deposit, for example, cash flows out from your business but the organization’s assets account is reduced.

When you buy expensive equipment, computers, or vehicles for your company to use as a resource, you will want to book them in the books of your business. As long as your business stays in the black, cash flow should be manageable. If you use accrual accounting, make sure to monitor this number carefully, it can vary significantly.

Learn All About Tax Deductions

Staying fully informed about your finances will provide you with the opportunity to find ways to save money. One way is by claiming tax deductions. Under the new tax law that went into effect in 2018, you can deduct expenses for education, training, mileage, and even commercial real estate accounting services. It is important to stay up-to-date on what deductions are allowable and which ones are no longer allowed.

Find a Good Commercial Real Estate Accounting Company

Proper commercial real estate bookkeeping keeps you on the right side of tax codes and sets you up for success and profitability. Understanding the basics is only one piece of a complicated puzzle. The fact of the matter is that you simply can’t do it all on your own.

If you are a commercial property investor looking for stability during this tumultuous time, the Laverty Chacón team is here for you. We help investors earn through the acquisition, management, and rental of commercial real estate. Contact us for a consultation and we can help with any concerns you may have.

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