Not all property managers are accounting experts, but accurate and organized accounting systems are nonetheless a crucial part of effective property management. Luckily for those of us that don’t have a significant background in accounting, there are many helpful tools available to aid property managers in effectively handling their accounting practices.
One of the most critical accounting tasks a property manager faces is the struggle to keep different properties’ finances separate from one another. This means that funds allocated for property A are kept separate from funds for properties B, C, and D and from funds meant specifically for the property management company itself.
The second biggest accounting concern for property managers is maintaining consistently up-to-date accounting records. With money constantly flowing in and out of each properties’ accounts, it’s essential to remain on top of payments received and made. Property managers must be able to quickly and efficiently respond to property owners’ inquiries regarding payments or bills.
Accounting software allows property managers to easily update payments made and received. It also allows you to see all accounts for your various properties, as well as the property management company itself. Property management accounting software also allows complete and organized records to be pulled at a moment’s notice, whether you need to review them yourself or want to send them out for a property owner’s review. Be sure to check out Buildium’s property accounting software, specifically tailored for property managers.
In addition to having a software-based accounting system, it’s also helpful to have a basic understanding of property management accounting practices and procedures. Understanding how, why, and when financial transactions occur makes the accounting process a more intuitive one. We recommend some of the following books (beginning with our own, of course):
- Property Management Accounting: A Survival Guide for Non-Accountants
- Accounting for Dummies
- Accounting for Non-Accountants, 2nd Edition: The Fast and Easy Way to Learn the Basics
Professional CPA Services
Finally, remember that it’s always okay to ask for help. Particularly around tax time, you want to make sure that you are taking advantage of all the tax deductions available for property owners, whether the owner is you or your employer.
While accounting is not your primary function as a property manager, it is certainly one of your most important. Using property management software with accounting capabilities, educating yourself about basic accounting principles, and not being afraid to ask a professional for help when necessary will all contribute to greater efficiency in handling the accounting procedures necessary to run your property management business.