Last Updated on: 27th January 2023, 04:02 am
As a real estate investor, the end of the year can be a stressful time with the pressure to get your financial statements in order for a number of reasons. It can be very confusing and stressful, but it doesn’t have to be that way.
In this blog post, we’ll be sharing some expert advice and resources to help you keep track and organize all your real estate finance activities all year round, so you can avoid the last-minute rush.
To begin let’s start with the obvious question…
Why do real estate investors need to hire a bookkeeper?
Real estate business owners or rental property owners may need to hire a bookkeeper for the following reasons:
- Tax compliance: The IRS requires individuals and businesses to file their tax returns and provide financial information to determine the amount of taxes owed.
- Lending requirements: Banks and other financial institutions may require up-to-date financial statements in order to approve loans or provide favorable interest rates for real estate investors.
- Business performance: Reviewing your finances regularly can help you understand the performance of your business and identify areas for improvement.
- Future planning: Having accurate financial information can help you make informed decisions about future investments and business strategy.
- Investor/partner reporting: If you have investors or partners, they may require regular financial statements to track the performance of their investment.
What is a bookkeeper?
A bookkeeper is a professional responsible for maintaining financial records, including income and expenses, and ensuring that the records are accurate and up-to-date. Bookkeepers help keep an accurate record of your real estate financial record and help assist in preparation and filing taxes in compliance with all the tax laws and regulations in your local area.
To explain this further, let’s answer a separate question.
What do bookkeepers do in real estate business?
The following are tasks and responsibilities a bookkeeper does in real estate business:
- Record keeping: Recording all financial transactions such as income from rent, expenses, and payments made to vendors and contractors.
- Accounts payable and receivable management: Keeping track of money owed to and by the business, including rent payments from tenants, mortgages and other loans.
- Bank reconciliation: Comparing the financial records with the bank statements to ensure that all transactions are recorded correctly and to identify any discrepancies.
- Budgeting: Preparing and managing budgets for the business, including income and expenses, and providing financial reports to management.
- Payroll: Processing employee payroll, including calculating and recording employee salary, bonuses, and deductions.
- Tax preparation: Preparing and filing all necessary tax forms, such as income tax returns, sales tax returns, and property tax returns.
- Auditing: Reviewing financial records to ensure accuracy and compliance with accounting standards and regulations.
- Financial forecasting: projecting future financial performance and providing recommendations to management.
- Financial analysis: Analyzing financial data to identify trends and make recommendations for improvement.
- Assistance with financial decision-making: Assist management in making financial decisions by providing them with financial information and advice.
A lot similar to what a typical accountant would do, or is it?
How Are Bookkeepers different from Accountants?
Bookkeeper keeps track of financial transactions, creates budgets and estimates for future financial performance, and finds and corrects errors in financial records. An accountant, on the other hand, analyzes financial data and provides advice and guidance for the business, including tax planning and compliance.
Both bookkeepers and accountants can provide financial services for a real estate business, and you can choose the one that fits your needs best. Although, some professionals may hold both a bookkeeping and an accounting certification and they can be referred to as a bookkeeper-accountant.
What software or tools do real estate bookkeepers need to have experience with?
Real estate bookkeepers typically need to have experience with various software and tools to effectively manage the financial aspects of a real estate business. Some of the most common software and tools used by real estate bookkeepers include:
- Appfolio: This is a property management software that helps real estate bookkeepers manage properties, tenants, and financial transactions. It includes features such as rent collection, accounting, and reporting. Experience with Appfolioor similar software for at least 1 year is typically required for real estate bookkeepers but not all the time.
- QuickBooks Online: This is a popular accounting software that allows real estate bookkeepers to track expenses, manage income, and create financial reports. It also has features such as invoicing and bill payment and can integrate with other apps and software. Experience QuickBooks Online for at least 1 year may be required for real estate bookkeepers.
- Buildium: This software is a property management software that helps real estate bookkeepers manage properties, tenants, and financial transactions. It includes features such as rent collection, accounting, and reporting. Experience with Buildium for at least 1 year may be required to be real estate bookkeeper.
- GSuite: A collection of powerful tools, including Gmail, Google Drive, and Google Calendar, that real estate bookkeepers can utilize to effectively communicate with clients, collaborate on documents and spreadsheets, and schedule appointments. It’s a particularly useful tool for remote collaboration and has become a common choice among bookkeepers who work remotely.
What are the qualification to be a real estate bookkeeper?
- A degree in accounting or bookkeeping
- Ability to focus on tasks at hand end ensure accurate bookkeeping records
- High level of accuracy
- Bookkeeper certification with at least one or two years of experience, or equivalent full charge bookkeeping experience.
- Quickbooks Online Certification
- Comfortable answering client questions regarding their financials
- Comfortable with ever changing technology and willingness to go with the flow as we grow and evolve in a very fast paced environment
- Ability to think independently, but not afraid to ask questions when needed.
- If you’ll be working remotely make sure to have a quiet workspace in order to work without interruptions, fully equipped computer or laptop and reliable internet connection
Are you aware that many real estate companies, such as those involved in wholesaling, fix and flip/construction, interior design, and buy and hold real estate (BRRRR) are now turning to overseas bookkeepers for their financial needs? This is because it’s more efficient and cost-effective to hire bookkeepers remotely.
If you’re interested in hiring a remote bookkeeper, there are a number of websites you can check out that specialize in connecting businesses with overseas bookkeepers such as Upwork, Onlinejobs.ph, and Fiverr.com.