Accounting 101: 8 Accounting Practices to Help Your Business Thrive

You’re in the property management business to make money for you and your clients. It is one thing to know how to operate a property management business generally, one thing to know how to manage tenants and properties, but it is another matter entirely knowing how to keep your business profitable. One of the most important tasks to achieve this profitability is by maintaining consistently accurate accounting. Follow the ideas in the guideline below to keep your real estate business thriving: Cash Flow Stay cash flow positive. It doesn’t get any easier than this, or any more important. Make more money than you are spending.  The routine recording of revenues, expenses, liabilities, and receivables will allow your company to track when your tenant and vendor invoices are paid. Which leads to the next point below… Bookkeeping Bookkeeping is simply the organization of financial information. And while you don’t have to be an accountant, as a property manager you do have to maintain accurate financial accounts for yourself and your client’s properties — most states require this by law. It’s the digital age so let good property management accounting software keep you on track and organized.  Here are some other important points to know: Accrual or Cash Basis. This is the first accounting management decision you’ll need to make based on how you choose to track and report income.  With the accrual accounting method, you record real estate income or outgoings as they happen or are scheduled to happen, regardless of receiving an actual payment or not. The cash basis is most popular for smaller property managers because money is entered into your books as soon as the transaction is completed. Journal. To keep financial records, you need a journal. This is where and how you record all of your real estate management companies' day-to-day transactions and is key for proper accounts management. Th...