Property managers repeatedly name accounting as one of the major stumbling blocks for their business. According to our research, we found that Accounting ranked #5 as the most significant challenge property managers face, up 10 points from last year.
To help take the sting out of it all, we put together the following Property Management Accounting Playbook. This playbook includes useful guides, webinars, and more resources all in one place to help property managers in the following 4 areas: accounting basics, bank account structure, audit prevention, and finding an accountant.
Property Managers’ Top Priorities, Challenges, and Technology
On your path to mastering property management accounting, you’ll first want to familiarize yourself with accounting terms and basic processes. To help get you there, check out these resources.
Webinar: Accounting for Non-Accountants
What it is: One of our most popular webinars breaks down the accounting process using real world examples and shows how software can help with outstanding resident balances and delinquencies, bank account reconciliation, and management fees.
Guide: Which accounting reports matter most?
What it is: A free downloadable guide to help you get a 360° view into your business’s financial health including owner reports, detailed income statements, balance sheets, and rent rolls.
Whether you’re building a house or managing a business, having a strong foundation is critical. If you find yourself operating on shaky ground, it’s never too late to establish or repair your foundation. All it takes is a little time and some know-how.
Bank Account Structure: A key step toward building a rock-solid accounting foundation is to establish a proper bank account structure. Doing so will simplify your accounting process, allow you to operate more efficiently, and ensure you are in compliance with federal, state, and local laws.
Blog: Reconstruct Your Bank Account Structure
Trust Account Setup: Beyond the bedrock that your property management accounting process is built upon, it’s also critical to setup your trust accounts properly and work with banks that understand a property manager’s responsibility as a fiduciary agent.
Blog: What You Didn’t Know About Trust AccountingDid you know...a true, legally-compliant trust account should be insured by up to $250,000 per beneficiary within that trust account? Click To Tweet
No one wants to be audited. Fortunately, few people ever are. Only about 1 percent of taxpayers and roughly 2.5 percent of small business owners are audited annually. But even though the likelihood of being audited is low, it’s a best practice for every business owner to be prepared for an audit just in case the IRS comes around. Audit-preparedness begins with having a strong accounting foundation ingrained in your day-to-day business operations.
Video: Knowing Your Books: Is Your Business Audit-Ready?
What it is: To help property managers avoid the audit scramble and be audit-ready, Brandon Hall, founder and CEO of The Real Estate CPA, turned his expertise and real estate prowess toward audit preparedness.
Pro Tip: There are two hard and fast rules to follow for bank account reconciliations:
While have a solid knowledge of your accounting process and structure is key, you can’t (and shouldn’t) do everything yourself. You already know that an accounting confidant is one of the most important consultants that you rely on in your business. In the Buildium Property Manager Podcast, we talked with CPA, Cynthia Leon about how to qualities that make a good accountant for your property management business.
Solid accounting is more than just accurate bookkeeping. It can provide you with valuable data to help you understand your business, be used as a strategic lever for future growth, and it has the ability to eliminate stress in the event of an audit.
Video: Knowing Your Books: On-Target Profit Margins
When it comes to property management accounting, it helps to have a property software solution in place—and more and more property managers are putting accounting software into the mix that’s specifically made for their business.
From our data, we found that accounting software adoption jumped 18 points in 2019—more than any other tool.
Armed with the information of accounting basics, bank structures, and audit preventative measures—and with the right technology—you’ll be poised to win in your market. With accounting know-how and tools on the ready, no task is unmanageable.