It’s important for every business to keep on top of its bookkeeping, even if the majority of us would probably rather be doing something else. Why worry about counting every penny when your time could be better spent generating business that increases your revenue by $100k this year? The truth is, bookkeeping is about much more than just accounting for every last dime.
Bookkeeping for real estate professionals and investors is an essential tool for everything from growing the business to understanding which business initiatives are or are not working. It can be time consuming, however, so it’s a great task to delegate to a virtual bookkeeping assistant. Let’s look at some bookkeeping basics and how outsourcing virtual assistant bookkeeping services can save you time and make you money.
Why Bookkeeping is Important
Bookkeeping may be fun to a certain set of individuals, but the majority of us find it challenging or boring or somewhere in between. We wonder why we have to do it in the first place. As far as tasks that we like to delegate to a virtual assistant, bookkeeping is pretty high on the list.
Aside from providing you personal peace of mind in understanding exactly where your business stands financially, there are some very practical and legal reasons why bookkeeping is so important.
While those are all great reasons to keep up with your books, one of the most important reasons it’s important to have well maintained books is that your business always stands the chance of being audited by the IRS. No one likes an audit, but if your books are in order, you’ll have a much easier time arguing your case and reconciling any discrepancies. You’ll also make the entire process as painless as possible.
Basic Bookkeeping for Real Estate
For those who have no prior experience, bookkeeping for real estate can feel like a daunting task. Beginners may see it as some kind of mix of finance and accounting, which screams “complicated.” Luckily, basic bookkeeping isn’t a terribly complicated endeavor, but it does require an investment in time and attention to detail. So, what exactly is bookkeeping?
Bookkeeping is basically just tracking all the money and assets that move in and out of your business, letting you know exactly where you’re at, at any given time. Now that we’ve got that extremely basic description out of the way, bookkeeping isn’t quite as simple as balancing your checkbook if you’re old enough to remember what that is.
That’s because bookkeeping doesn’t stop at the money going in and out of accounts. Bookkeeping also involves tracking assets, depreciation, and all the things that define your company’s actual value.
But do you know how to keep track of assets? How about depreciation? There’s a very real learning curve if you’re going to take care of the bookkeeping duties yourself.
Most real estate investors use a cash basis for their accounting system, which means that income is recorded when it actually comes in, and expenses are recorded when they’re paid out. There are some standard transactions that always get recorded when we’re bookkeeping for real estate entities. These transactions may include:
Rent invoices sent to tenants
Receipt of monthly rent payments
Late fees for unpaid rent
Posting security deposits to the balance sheet
Vendor invoice payments
Monthly mortgage payments
Apportioning monies to interest and principal loan balance
Property tax payments
HomeOwners’ Association (HOA) payments
Reconciling monthly financial statements
Correctly classifying payments
Properly tracking accrued depreciation
Accurately reporting owner’s equity
Why hiring a bookkeeping virtual assistant is a good move
While it’s always helpful to have an accountant on staff, it’s not always practical for some businesses. For instance, if you run a small organization, you may not have the workload or the funds to justify taking on an accountant or bookkeeper full time. Pair that with the fact that learning how to do bookkeeping for real estate comes with that fairly steep learning curve that eats up a lot of time for busy professionals, and you’ll start seeing the benefits of hiring a virtual assistant in no time.
You can hire them to perform as many or few tasks as you’d like
One of the significant advantages to hiring a firm to perform virtual bookkeeping for real estate companies is that you can specify the workload. Whether you want them working two hours a week or twenty, you can find qualified talent to take your business to the next level without being tied into full time staff members or long contracts.
Scalability is another benefit of going with a virtual assistant to take care of your real estate bookkeeping services. Once you outgrow your current service and require more help, you can easily add members or hours to your plan rather than placing another ad and interviewing dozens more accounting professionals.
You have access to talent pools from around the world
When we hire a new full time employee, we are generally limited to the local talent pool and out of town candidates who are willing to relocate. If your local talent pool is limited, you’ll have to pay top dollar to attract and retain quality candidates from out of town. By going with a virtual team, you have access to talent pools from around the world without the burden of trying to relocate them.
How does virtual bookkeeping for real estate work?
Investing in virtual bookkeeping services for real estate investors and agents gives you great insight into more than just the books. Bookkeeping for real estate gives you insight into how certain business initiatives are working out, how much money is on the table for expansion or new initiatives, or a whole host of other things.
If you feel that your company could benefit from some remote help, there are some steps you should take to ensure you get the talent you need and organize the relationship properly.
The first step in setting up virtual bookkeeping services for real estate is to take inventory of your specific needs, including both goals and pain points. You’ll get a whole lot more out of it if you know what you’re looking for.
Also, the specifics of a bookkeeping service for real estate agents might look a little different from bookkeeping for real estate investors. Communicating your needs to your virtual bookkeeping service is essential to setting up the right team.
Build and staff
Once you’ve identified your needs, it’s time to build your team. Depending on your current people, processes, and platform needs, you may require anything from an assistant to complement your team to a standalone finance department.
When you’re ready to go live, make sure you have some time set aside to get your virtual staff set up on the right foot. Making sure they have everything they need as well as the freedom to operate, you’ll set yourself up for success from the beginning and give yourself benchmarks so you can easily see where things could be improved. Ironing out the kinks early on will make it much easier to deal with any potential hiccups in the future.
Any good provider of virtual bookkeeping for real estate defines itself as much by its support as it does its product. That support is where the true value comes in. When you have someone to help you get the most out of your bookkeeping efforts and help you interpret and take action on the contents of your books, you’ve got yourself an indispensable member of the team.
Considering a Virtual Bookkeeper for Your Organization
The benefits of bookkeeping for real estate company operations are hard to overstate. Well kept books help you see exactly where your business sits and show you where you can take it. Not everyone needs full time accountants for real estate companies. Many of us can get by with a part time bookkeeper. No matter what level of help you need, hiring a virtual assistant or team could be exactly what you’re looking for at a price and scalability that makes it feasible both now and in the long term.