If you are one of the many investors looking to dip your toes into commercial real estate investing, there are many tips and tricks that can ensure your journey is smooth and profitable. One of the most critical things that many new investors make errors with is bookkeeping and accounting. Working with the professionals at MKS&H is a great way to simplify things, but there are ways that you can ensure your books are in great condition before you give them to us to take a look.
4 Commercial Real Estate Accounting Tips
- Keep your personal expenses separate from your business expenses, even if you do not have many business expenses. This serves two primary purposes, as it makes the bookkeeping process easier and prevents any legal issues down the road. It’s a very bad idea to keep both types of transactions in the same account, especially if you are using (or plan to start using) a legal entity like an LLC.
- Whenever you spend money, keep meticulous records and receipts. When you keep your receipts, you can note what property it was related to and why it was spent on the receipt directly. These are useful if the IRS wants to take a closer look at your taxes, and it also helps you to have a better idea of where you are spending your money and which of your properties have the most upkeep.
- As money flows into and out of your business, you should itemize it to keep it as organized as possible. Just like with the tips above, this will help your commercial real estate business get insight into how you are spending money and could potentially save money to improve your profit margin.
- Don’t forget to reconcile your records with your actual bank account and credit card statements. Your numbers, ideally, will match up perfectly and not take very long at all to confirm. Reconciliation is so important because it ensures that the amount of money you do have is the same as the amount of money you should have. If you started with $2,500 in your account, made $1,000 and spent $2,000, your account balance should match perfectly and be $1,500.
Make Finances Easy at Your Commercial Real Estate Business with MKS&H
MKS&H provides tax and accounting services to businesses of every size and in every industry, including construction and commercial real estate. We can work with you to improve your company and make sure that it is financially secure now and in the future. Contact us today for a consultation.
About MKS&H: McLean, Koehler, Sparks & Hammond (MKS&H) is a professional service firm with offices in Hunt Valley and Frederick. MKS&H helps owners and organizational leaders become more successful by putting complex financial data into truly meaningful context. But deeper than dollars and data, our focus is on developing an understanding of you, your culture and your business goals. This approach enables our clients to achieve their greatest potential.