How to Avoid These Common Real Estate Accounting Mistakes
When you work with real estate, realty accounting is a bit part of your business. The last thing you want to do is make a mistake with your books, which can cause a lot of other problems to develop down the road. Here's a quick look at some of the most common real estate accounting mistakes and how to avoid them in your business.
Failing to back up data: It's not just that letter or spreadsheet you're working on, it's everything you've got stored on your computer. Your accounting records are vulnerable to the same issues the rest of your data is vulnerable to. Remember to back your data on a daily or, at a minimum, weekly basis.
Not having books checked by experienced accountants: Taking care of accounting tasks because someone told you that was how they did it isn't the same as having an experienced accountant tell you the proper way to keep your books. Spend a little money and make sure your process is correct.
Mingling personal and business funds: Was that purchase for your business or for your kid's next project? If you don't keep your business funds in a separate account, it can be difficult to determine, making tax time a nightmare. It's not difficult to set up a basic business account.
Filing taxes incorrectly: Failing to follow the rules not only makes you miss out on tax credits, it can cost you money in fees. Whether you use cash or accrual accounting methods, use the same one every year. Pay attention to what's going on to take advantage of credits.
Disbursing funds before a transaction is complete: Though it's a common practice to distribute trust or escrow deposits, it can make your agency non-compliant with your government requirements. Last-minute agreements may change the commission, putting you in a world of hurt.
By keeping these realty accounting mistakes in mind when working on your business finances, you can keep your business operating at a reduced risk for issues that can arise during an audit or similar situation. But what if you're not sure if how you're running your business finances is correct or not? The experienced professionals at AccountRely can help. Please feel free to reach out today to get started.