April 15, 2024, is the last day to file your taxes from last year. The IRS expects more than 128.7 million tax returns to be filed before the deadline.
Landlords might think of tax season as chaotic, but it doesn’t have to be. The best real estate accounting software can do most of the legwork for you. You don’t really have to do anything if you also hire a property manager.
First and foremost, you need your accounting system in place. Even if you outsource the task, you’ll want something that makes sense to you. After all, it is your business.
Keep reading to learn what to look for when choosing a rental property accounting software program.
Consider the Cost
Real estate accounting software can vary in price. You’ll spend more on a software program with more quality features. Depending on how many properties you own, some features might be irrelevant to your business.
Even if you shell out your cash for quality features, you need to be wary about overpaying. You might end up paying for features you never even use.
Consider choosing a program that offers a free trial so you can understand what features you need.
Ask about additional fees while testing out the program. Software setup, data storage, and updates might not be included in the initial cost.
You should also know how you are going to be charged for the software. Some companies take a yearly one-time fee while others charge monthly. You may have a choice in the matter.
Knowing this is important because it can affect how you budget.
Test the User-Friendliness
User-friendliness is one of the most important factors to consider when choosing accounting software. It’s likely that you aren’t skilled in accounting. There are programs made for beginner bookkeepers.
This is another reason why a free trial is important. You can use the demonstration period to learn the software or see if it’s too complicated for your skillset.
Many landlords utilize property management services that can handle money management and rental property accounting. They can help with managing your property and providing you with financial reports.
A property owner won’t have to learn any new software because a professional property manager will already know what to do. It’s still a good idea to understand enough about your software to be able to log in and get an overview of your finances.
Learn About Common Features
Investment properties require basic accounting software features. However, learning about other features could make the accounting process more efficient and accurate.
There are a lot of things to choose from so that you can find the program that fits the needs of your business. Some of the most common features include:
- Financial statements
- Invoice creation and tracking
- Credit card processing
- Bank account integration
Technology trends have made certain software programs more efficient. For example, a lot of software can be set up to automate time-consuming tasks.
Depending on the program, landlords may benefit from automated invoicing, accounts receivable, and bank account reconciliation. Automation can help prevent costly manual errors.
While these are common features, there are more complex features, like tax preparation, that landlords can benefit from.
Tax Preparation
Some rental property software programs include automatic tax calculations and reporting. These programs make tax filing through the IRS much easier.
If you have an accountant, you can easily send them the financial data that your software collects.
Accounting software makes it simple to stay tax-compliant. You’ll have a complete trail of your transactions to keep records accurate. Having accurate records makes it simple to see where you can save money with rental property tax deductions.
Property managers can often act as accounting professionals. You can get your property management needs and accounting needs taken care of in one place.
Opt for Integration
A great accounting software won’t feel as great if it can’t easily integrate.
Tenant portals, for example, should integrate with your accounting software. Implementing a tenant portal is an easy way to collect rent payments online. It’s convenient for landlords and tenants, which makes it more likely they’ll pay rent on time.
Opt for a software program that can integrate with a tenant portal and other existing solutions. Working with numerous systems increases the risk of human error.
Additionally, you’ll want to ensure that your accounting software can support all of your properties. Having one account for various locations can minimize costs and help keep things cohesive.
Add Multiple Users
Multiple users should be able to use your accounting software, especially if you hire property managers. Choose a software that lets you add users who can use the system and track financial data.
It’s even better if you can find a software program that offers certain user permissions. As the owner, you should have a complete view of the software. Your property manager or accountant should too.
Lower-level employees who handle minimum day-to-day tasks will have less access.
Owners who don’t spend a lot of time on the premises of the property should still be able to access the accounting software. This is where cloud-based versions come in handy.
A lot of the best accounting programs come with an app. You can access the software anywhere with an internet connection through your smart devices.
If you receive a free demo of the software, make sure you see how it works on the different devices you might use. Apps may have different capabilities than desktop versions of accounting software.
Choosing the Best Real Estate Accounting Software
Choosing the best real estate accounting software requires a lot of research. Luckily, our specialized accounting team has already done most of this for you.
Reedy & Company is a leading Memphis real estate investment company. We have more than 40 years of property management experience. Our team of professionals can simplify your investment to ensure profitability.
With specialist and local knowledge, we provide best-in-class advice to landlords and investors. Make better property decisions by partnering with us. Contact us today to get started.
