I work in the competitive world of real estate investments, and I feel like other investors are growing at a faster rate than I am. A colleague in the industry recommended working with a bookkeeping service, but don’t they only help with payroll and tax preparation? How will working with a bookkeeping service help me progress?
-Todd
A great real estate investor knows exactly how their money is being spent. But before you can be considered great, you need to learn the importance of good bookkeeping. Clean books are critical to your success in the real estate world, so how exactly can you and your investment company benefit from a bookkeeping service? The four points below will address just that.
Track Business Performance;
We can’t say it enough; running a successful business and having exemplary financial books go hand-in-hand. In order to gauge how well your business is performing and track your incoming and outgoing costs, you need a financial blueprint to run efficiently all year through, not just at tax time! Real Estate Investors need to be especially organized with their books; every expense needs tracking, with standings changing every week, month and quarter. Ensuring a strong bookkeeping system takes out your guesswork.
Pinpoint Specifics;
More often than not, a Real Estate Investor has more than one project happening simultaneously. That means juggling multiple vendors, contractors and budgets at the same time. Your remote bookkeeping expert is on hand to accurately determine your return on investment (ROI), and track all of your miscellaneous costs. Tracking all of your investments and marketing techniques allows you to gauge their success rates, for example, determining how cost effective a mass mailing is in terms of a lead generation being turned into a deal. Following up with these details will allow you to establish what marketing techniques are adding to your net income, and which are putting you in the red.
Monitoring Cash Flow;
Real Estate Investors need to make quick decisions at the drop of a hat. You never know when an investment opportunity will turn up, and you need to know exactly what your cash flow situation is. Not only will your bookkeeping team have that information available to you at any given time, but they will also be able to advise you on where your numbers are headed. Staying abreast of your cash flow means that you can manage your debt, purchases and additional business expenses.
Tax Prep;
Tax preparation is hardly the only thing bookkeepers do, but it’s certainly an added bonus to working with a service! Utilizing a virtual bookkeeper year rounds means an essentially effortless tax preparation, because your bookkeeping team has been taking small steps all year to get your business an multitude of accounts ready to go. Every property you own will be organized and prepared by the time tax season comes into play.
Whether you are closing a small handful of deals each year, or several dozen, it’s imperative that you account for every monetary amount that you are spending and receiving. Bookkeeping for Real Estate Investors isn’t just for tax prep; it’s an imperative element of a growing and successful business.
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