Whether you run a real estate agency or manage properties for clients, real estate accounting can be complex. But it doesn’t have to be that way. Re-Leased, a cloud-based property management software company shares some tips for making it easier.
Working in real estate means dealing with large sums of money on a regular basis. That’s true whether you:
In all of these roles, well-managed real estate accounting can make all the difference. Mistakes could cost you (or your clients) a lot of money.
Re-Leased talks to us about how property management software can save time and ensure data is up-to-date.
The real estate industry forms a major part of the national and global economy. Accounting regulations are designed to:
The regulations in force don’t always achieve these goals – but they are the rules that you must follow. In particular, some countries now have stricter rules about:
With all these regulations, it’s sensible to seek assistance if you’re new to real estate accounting. Before you even start your new business, talk to an accountant.
If possible, try to find an accounting firm that specializes in real estate accounting. There are many rules to bear in mind, and an accountant will help you follow them. They will also be able to:
In short, the right accountant will save you more money than they cost you. So hire an accountant before you start trading.
In other types of business, stock has a clear and specific value. But in real estate, transactions are less frequent. One house or office block might remain in the same hands for years or even decades, so it can be hard to figure out what its value is today.
Most real estate valuations are based on estimates. Until a transaction takes place, the real value is unknown. So estimates of value are part of selling or managing real estate for clients. They are usually based on recent sales of similar real estate in the same area.
Accurate asset evaluation is essential for accounting purposes. Taxes and other charges are often based on value.
If you inaccurately value the real estate you manage or sell, you could be liable to prosecution. So follow valuation regulations carefully, and keep accurate records in your accounting software.
Real estate businesses often hire staff based on commission, or a percentage of the rental income they manage. Some use a combination of a fixed salary plus commission.
For agencies in particular, it makes sense to offer salespeople commission for completed sales. This is a big incentive for them to work hard. However commissions can make payroll more difficult, since your staff payments will fluctuate.
You can make this simpler by using accounting software that has payroll features built-in. Completed transactions can be assigned to particular staff members, with commission calculated automatically.
Remember, commissions are subject to income tax. It’s important to keep track of the figures so you withhold the right amount of tax.
If your staff work remotely or complete tasks while they’re out and about on a job, look at using online property management software for your real estate business. It will mean that your employees can work from anywhere, at any time, on any device – which is a real advantage in the property industry.
Make sure your business uses software applications that integrate with your property management software. When your software is streamlined and in sync, you’ll be more efficient and be able to offer superior service to your clients.