Top Five Financial Mistakes That a Real Estate Accountant Can Help You Avoid

Real estate agents encounter complex market dynamics daily and sometimes need external help to sift through the muddy waters to avoid serious financial mistakes.

Bookkeeping mistakes can often affect the operation of investors and real estate agents alike.

The importance and relevance of bookkeeping cannot be understated, and real estate agents and investors need to be aware of such criteria to navigate the murky waters effectively.

Let us explore the five leading financial mistakes that a real estate accountant can help you avoid.

1. Improper Maintenance of Records

Most real estate agents and investors do not have enough time to maintain proper bookkeeping records.

Irregularities in bookkeeping are one of the main challenges agents and investors face.

In ideal situations, you need to devote a serious amount of time and effort to maintain bookkeeping records to stay ahead of the curve.

Real estate agents and investors can hire third-party accountants such as an Appfolio accountant or Yardi accountant to maintain accuracy in bookkeeping.

Real estate accounting also requires the involvement of tax experts to keep an eye on tax-related issues and ensure that customers pay their taxes.

Inconsistencies in bookkeeping can create a host of problems that can make it hard to prepare for internal and external audits, which is why accountants can help you avoid making financial mistakes.

Quick Accounting Solution has great accounting options that fit the need for all business structures.

2. No Separation Between Personal and Business Bank Accounts

Initially, having one bank account for all monetary transactions may not be a big problem, but eventually, it can pile up and create a host of problems.

It is helpful to separate personal transactions for your personal bank account to avoid overlaps and the possibility of human error.

Your personal bank account takes care of your non-business-related daily expenses, and it's essential not to mix these expenses with your business bank account as this can create complications.

One of the common occurrences from mixing bank accounts is the impossibility of tracing business cash inflow activities.

That said, it is pretty challenging separating bank accounts if you’re inexperienced and managing operations from one account; you might have to switch up your strategy for optimal results.

It is ideal for more straightforward tax calculations, and single bank accounts can result in scrambled information that produces complex problems.

3. Unstructured Employee Classification

A typical bookkeeping error in real estate accounting is overlooking employees’ classification.

Investors and agents require independent contractors and employees to carry out business operations efficiently, which requires the classification of employees and contractors alike; this prevents misfiling of tax returns and accidentally paying more taxes.

As the number of employees increases, the need for classification becomes greater.

Classification enables a better understanding of tax structure as a whole and helps you stay true to standard tax calculation practices.

4. Poor Backup Solutions

Since digitalization has occurred, investors and real estate agents need to use different tools to improve business operations.

Financial structures see improvements with advancements in technology; however, technological solutions also lead to an increasing number of IT problems.

IT problems are severe and can affect your valuable data, which is why backup must be considered for your financial data to prevent the possibility of losses.

Without backup solutions, you can incur heavy financial losses due to lost financial data and clients' information.

Digitalized solutions for bookkeeping allow backup solutions to exist, which can generate original data and maintain accuracy in scanned receipts.

Real estate agents and investors must keep with the times and use digitalization to their advantage to generate solutions that are beneficial for their firm.

Data backup is also a strong line of defense against cybercriminals who may seek to steal your information and trade it on the dark web.

5. Overlap Categorization of Expenses

As an investor or real estate agent, you must control tax exemptions relating to your expenses.

Many agents and investors can fall into the trap of irregularly categorized expenses that are hard to decipher.

Without adequate categorization and classification of your company's expenses, you will be hard-pressed to itemize the right items.

Different expenses relate to different taxations, which means that you can avoid financial losses by distinguishing between various costs and painting a clearer picture of how things actually are.

Final Thoughts

By hiring a Yardi accountant or an Appfolio accountant, you can avoid making common bookkeeping errors that can incur financial losses for your company or firm.

Keep in mind that you also have to be somewhat knowledgeable about bookkeeping as a whole, but if you do not have time for it, third-party accountants are the perfect solution to your bookkeeping problems.