Real estate accounting and accounting for property development can be complex but there are ways to manage it and make it less complicated. Whether you’re running a property development firm, or a fast-paced real estate agency, you’ll be dealing with large sums of money on the daily.
So, what’s the best way to manage your business when there are so many variables to consider? The answer? Tools, tools, tools. With the right tools, you’ll be able to save time, keep data up to date, avoid costly mistakes, and simply make a huge difference to functionality of your business.
Let’s face it – nobody thinks real estate accounting is a breeze. It’s hard to keep up with it and DIY is a no-no, especially if you have no experience with it. Regulations in the real estate industry are designed to maximise the contribution of real estate to the country’s GDP, as well as encourage wealth creation. These rules regulate the transfer and identification of ownership, money laundering, property taxes, residential and commercial property valuation, and expense offsetting.
It’s important to talk to an accountant who specialises in real estate accounting or property accounting. Aside from staying on top of the many ever-changing property rules, your accountant will help you structure your business in the most tax-effective way, avoid unnecessary expenses and utilise online accounting software, so you can understand reports and forecasts and make informed business decisions. With the right accountant, you’ll save more coin than you’ll ever spend on them.
An accounting software has endless possibilities. To maximise your profits and maintain a healthy cash flow, you’ll need thorough accounting of your operational expenses that will allow you to claim all your tax deductibles. A good bookkeeper can help you deal with your daily accounts and keep all figures updated on the system, so every cost is accounted for.
An online cloud accounting software will also keep your accounts secure and updated anytime, anywhere. It will allow you to share financial data with your accountant and bookkeeper in real-time, track your portfolio’s performance through powerful reporting, and automate payroll and bank feeds, among others. Modern accounting software are a breeze to set-up, so you can do away with unnecessary IT overheads or servers.
Recently, real estate businesses have stepped into the auditing limelight – with many real estate agents being subject IRD audits in the past year. Provided your business could be audited anytime, it’s vital that your records are accessible and secure in your accounting software to simplify the auditing process. While we at Outside think any accounting software is a good step forward, Xero is unbeatable when it comes to usability and functionality, not just for us as your accountants, but for owners like yourself. It’s also worth giving your accountant a bell, to see what kind of audit insurance is out there for your business as a precautionary measure.
In the real estate industry, value can be hard to figure out. Most property valuations are based on estimates and the real value will only be known when the transaction takes place. Regardless of its difficulty though, accurate estimation is important in accounting, as taxes and other charges are based on value. If the value is inaccurate, you could face some hefty fines and penalties, so it’s a must to follow valuation regulations. Seek help from your accountant and make sure you keep accurate and accessible records.
Real estate accounting is complex, but manageable with the right tools (meaning you’ll need more than just a spreadsheet if you want your property development business to succeed). Make sure you have the right information in your hands at all times, and with the help of your accountant and software like Xero, so you can make the right decisions and have more time to work on your business, instead of in it.
Want to chat property development and real estate? Give us a call, or send us a message if you’re keen on some insights into what we can do for you and your business. We’re only a click away any time you need us!
Your Outside Team
Address: Level 2, 182 Vivian Street,
Te Aro, Wellington 6011, New Zealand
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