For fiscal year 2023, the IRS assessed over $5 billion in penalties related to business income taxes. If you're not careful with your Portsmouth, NH, rental property accounting tasks, you risk getting penalized by the IRS, too.
Luckily, you've come to the right page. Read on, as the Cardinal Point Property Management team has shared landlord accounting basics and tips for improving rental finances management.
Track All Rental Expenses
Rental expenses are the costs associated with running your rental business. According to Investopedia, these expenditures depend on the specific type of lease you have with your tenants. If it's a gross lease, which Investopedia also says is the type most tenants prefer, the expenses you, the landlord, are responsible for include:
- Property taxes
- Insurance
- Property maintenance
In addition, you must account for:
- Other applicable federal, state, and municipality taxes
- Administrative fees like property marketing and advertising
- Vacancies (e.g., when tenants leave and don't renew their lease)
Rental property expense tracking helps you gauge if you're losing money, breaking even, or making profits. So, to better manage rental income and see where it goes, track all your property's costs. Keep all records, too, as they can serve as proof if the IRS audits you.
Separate Rental Property Accounting Records for Each Property
If you rent out more than one Portsmouth property, separate their records. It is also wise to open and maintain different bank accounts for each.
Keeping things separate lets you easily track each property's cash flow and find specific records.
Hire a Property Management Company
If you can't or have little time to carry out all your rental property accounting responsibilities, delegate them to a professional property management firm. With their help, you no longer have to do the above steps, as they'll do it on your behalf.
For example, if you choose Cardinal Point Property Management, you'll enjoy the following benefits.
Detailed Financial Accounting and Reporting
Cardinal Point Property Management utilizes a secure, innovative, and automated web-based accounting system. Through this advanced online portal, you can check the accounting tasks we've performed, such as:
- Collected and processed rent
- Maintenance services performed and paid for
- Payment of items you've requested
- Income reporting
- Annual summary owner statement
As part of our services, we'll ensure you receive your tax statements and 1099s yearly.
Full-Service Solutions
If you opt for our full-service solutions, you'll get a dedicated manager who'll:
- Do all your accounting
- Market your property
- Screen and place high-quality tenants on your property
- Enforce lease agreements
- Collect rent
- Oversee maintenance and repairs
- Assist with the eviction process
So, if you're looking for the quickest, most convenient way to ensure your rental properties comply with all federal, state, and local laws, outsource your property management to the pros.
Partner With Cardinal Point Property Management
Accurate rental property accounting won't just help you manage your rental income better but also help you avoid non-compliance. So, to minimize risks, consider teaming up with our full-service company, Cardinal Point Property Management.
We opened our doors 12 years ago (in 2012), but our experts have a collective experience of over 30 years. We'll use all our knowledge, skills, and innovative technology to provide all the lease-related services you need.
Speak with us today to request your free rental property analysis!
