Tracking rental property expenses are essential when managing your investments and avoiding problems with the IRS. An audit can create significant obstacles for you, so it’s best to organize your finances as early as possible. Professional property management consultants discuss which expenses to track and ways you can simplify the process.
The following tips on tracking your rental property expenses come from our team at SWFL Commercial Group in Ft. Myers, FL.
Switch to Digital Applications
Today, digital technology helps entrepreneurs in all industries stay organized and on time. Keeping hard copies of your records doesn’t hurt, but navigating through hundreds of papers during tax season is challenging.
Make it easier on yourself and your tenants by setting up an online portal to collect rent, keep up with maintenance requests, and track finances. It’s best to centralize these tools using a secure network to avoid the hassle of organizing records between multiple third-party services.
Mobile Devices Save Time
Designate a smart device for your work. Whether you use an iPad or a secure phone, this technology will help you on the go. Mobile applications allow you to record purchases and take notes when visiting your properties, so you don’t forget any crucial details later.
Connect your devices to a cloud service to back up all your data. This method allows you to continue tracking rental property expenses when you upgrade or switch phones.
Keep Tabs on All Your Receipts
You’ll understand how quickly expenses can pile up if you own multiple properties. Always collect receipts for business-related purchases, such as:
- Move-out cleaning services
- Pest control services
- Utility and appliance repairs and replacements
- Emergency weather mitigation
- Subscription services
- Licensing fees
- Insurance fees
- Gas when traveling for work
- Day-to-day supplies
Remember Your Employees
Do you hire full-time employees or independent contractors to help manage your properties? If so, keep salaries, fees, and other related expense records organized at all times.
These income sheets are crucial when tax season comes around. Generally, employers must withhold Medicare and social security taxes from employee paychecks.
Factor in Depreciation Deductions
Equipment and furniture in rental properties depreciate every year. You can submit the total depreciation of your investments on your annual tax forms.
Calculating property taxes can be confusing. A property management company can help you crunch the numbers if you aren’t sure.
Legal Expenses
It’s wise to hire a lawyer to help you draft tenant leases, communicate with insurance companies, and help you protect investments.
Regardless of how often you use the services of a lawyer or financial advisor, keep a record of every expense and report them to the IRS when necessary.
Partner With a Property Management Company
Hiring a property management company is an excellent way to avoid an IRS audit. At SWFL Commercial Group, clients can get help organizing their finances and offer strategic guidance to improve their entrepreneurial skills.
Both small and middle-market landlords can benefit from these services. We provide professional advice and resources to help maximize our clients’ profit-making potential and reduce the management burdens of owning multiple properties.
Learn more about tracking rental property expenses from SWFL Commercial Group in Ft. Myers, FL, at 239-510-3606.
