Date: 8th February 2016
Whether you run a real estate agency or manage properties for clients, real estate accounting can be complex. But it doesn’t have to be that way. Re-Leased, a Xero add-on, cloud-based property management software company, shares some tips for making it easier if you:
There are many regulations in force around real estate that must be followed, for example:
With all these regulations, it’s sensible to seek assistance if you’re new to real estate accounting and an accountant will help you follow them. They will also be able to:
In other types of business, stock has a clear and specific value. But in real estate, transactions are less frequent so it can be hard to figure out what its value is today.
Most real estate valuations are based on estimates. Until a transaction takes place, the real value is unknown. So estimates of value are part of selling or managing real estate for clients. They are usually based on recent sales of similar real estate in the same area.
Accurate asset evaluation is essential for accounting purposes. Taxes and other charges are often based on value.
If you inaccurately value the real estate you manage or sell, you could be liable to prosecution. So follow valuation regulations carefully, and keep accurate records in your accounting software.
Real estate businesses often hire staff based on commission, or a percentage of the rental income they manage. Some use a combination of a fixed salary plus commission.
Commissions can make payroll more difficult, since your staff payments will fluctuate but you can make this simpler by using accounting software that has payroll features built-in. Completed transactions can be assigned to particular staff members, with commission calculated automatically.
You’ll also need to keep track of the figures so you withhold the right amount of tax.
If your staff work remotely or complete tasks while they’re out and about on a job, look at using online property management software for your real estate business. It will mean that your employees can work from anywhere, at any time, on any device – which is a real advantage in the property industry.
Make sure your business uses software applications that integrate with your property management software. When your software is streamlined and in sync, you’ll be more efficient and be able to offer superior service to your clients.
Read the full article at Xero.com.
From time to time Findlay and Co run Xero workshops for Real Estate Agents and other small-medium businesses. Check the schedule here or contact us if you need help with any aspect of real estate accounting.