Financial reporting is a fundamental aspect of any business, and property management is no exception. Neat and well-presented reports provide an accurate insight into the performance of your assets. As property owners in Beaufort, it is essential to have a fully functional and reliable accounting system in place. This will aid in organizing your work, make it more profitable, and simplify your annual tax filing.
A financial report is essential for understanding how well or worse your real estate management portfolio is doing. It encapsulates your financial performance on an annual or quarterly basis. The report gives you a detailed insight into your expenses, income, and profits and helps you identify the key expenses for your properties. A financial report is also critical for tax requirements.
As a property owner, you can never give your tenants too much information. But for them to be aware of each tiny detail regarding the houses, you should have all your records straight first. Here are a few essentials you must consider for effective financial reporting.
Financial Statement Analysis
If you are managing multiple properties simultaneously in Beaufort, it is essential to draft a spreadsheet that you can update annually for tax purposes.
For every property, you should maintain a financial statement which will comprise an income statement, balance sheet, cash flow statement, as well as a statement of retained earnings. This will help you efficiently track the property’s financial health and your business’s overall profit/loss as well.
Accounting Reports and Access to Software
You can use accounting software to keep a thorough record of all your finances. Several property owners use accounting software to streamline their financial records on a monthly, quarterly, or annual basis.
Using such software will help your accountant quickly access the financial statement while doing your taxes, giving them clear access to every invoice that has been paid over the year.
Finance Management Documentation
Multiple properties will require different records to keep track of their independent finances. You can have commercial properties with multiple units under a separate LLC and use your accounting software to create a separate financial record for each entity.
The bank account and the credit card used for expenses is another aspect you need to appraise. You can maintain separate credit cards or accounts for each asset, which lets you keep track of how much is being spent on every unit. Additionally, you can also create a spreadsheet to record your rental income from different units.
Providing all this data gives you a clear picture of how well your properties are being managed.
Income and Expense Reports
An income and expense report will highlight the earnings of the property. It also reflects the expenses you must make to keep the property running, including rental income details, late fees, and property management charges. It will also consist of the cost of repair and maintenance, utilities, vendor fees, and taxes.
Owner’s Monthly Operating Statement
Another critical report that property owners are required to maintain is the owner’s statement. It will include all the financial transactions that have taken place for their property such as services fees, utility costs, maintenance costs, and fees for vendors and contractors. The minimum that this statement should consist of is a balance sheet and a profit and loss statement.
In-depth financial reports for every property you own or manage helps you maintain a detailed assessment of the property’s profits, giving you a clear big picture for your business. At Beaufort Rentals, we maintain extensive financial reports for all our property owners, including the necessary financial statements, accessible at all times via an online account. For more advice regarding how to prepare financial reports or to get help managing your property, connect with us at Beaufort Rentals.