Financial Clarity: A Guide to Real Estate Accounting for Agents and Investors

Apart from her professional identity, she’s a wife, mom, farmer, and musician. The software comes with an analytics feature, which encourages business growth and provides a list of owner portfolios. Through a single account, only one user and one accountant can access it. Add accounting widgets to your phone’s home screen; track time using your Apple Watch. 95+ years of combined experience covering small business and personal finance.

• This might involve streamlining operating expenses, implementing cost-saving measures, or exploring new investment opportunities.
• Ignoring financial data until tax-time is a trap that many real estate agents and other self-employed entrepreneurs fall into.
• Search for “accounting services for small business” to find tailored solutions that fit your needs.
• You now have $200,000 less in cash, but a significant asset worth that amount.
• A strong foundation in general accounting principles is crucial for any real estate accountant.

Summary: The Best Real Estate Accounting Software

However, it’s essential to understand the process and check the reconciliation report to ensure accuracy. Regardless of whether you choose the cash or accrual model for your real estate bookkeeping, you’ll want to establish a double-entry system for your accounting materials. Meanwhile, if you hire a photographer to help you market a house on a per-property basis, their services are part of your COGS. If 10 new listings are added within a month and you need to photograph each of their homes, then your photography expenses will be higher than if you have only two clients another month. Today’s leading accounting platforms offer standard QuickBooks security features, such as data encryption, secure credential tokenization and more. While human error will always play some role in security breaches, you can be confident in your accounting platform when it comes to keeping your information safe.

Simplify Your Real Estate Accounting with Software

A strong foundation in accounting real estate bookkeeping best practices paves a smooth path for your business to flourish and win new clients. NerdWallet independently reviews accounting software products before determining our top picks. We collect the data for our software ratings from products’ public-facing websites and from company representatives. Information is gathered on a regular basis and reviewed by our editorial team for consistency and accuracy.

Bookkeeping and Accounting for Realtors

• Look at each plan offered by a considered software and select the one that will most likely meet your needs, particularly in terms of the number of users and breadth of features.
• It’s important to remember that essentially all the money that you generate from your business activities, no matter what form it’s in, is counted as income.
• Without reliable bookkeeping, agents are forced to make business decisions in the dark, often with undesirable results.
• Reviewing financial statements on a monthly basis is a good place to start, regardless of when you’re expecting commissions.
• For deeper insights into depreciation calculations, explore this resource from New Mexico State University.
• Many use accounting software with location tagging or consult CPAs familiar with multi-state filings.

This avoids confusion, simplifies tax preparation, and provides a clearer view of your business’s financial health. Decide between cash-based and accrual-based accounting to track your expenses and income. Cash-based accounting records income and expenses when cash changes hands, providing a clear Accounts Payable Management view of available funds.

The software handles all the unique needs of a real estate business apart from accounting. For that function, Propertybase has a direct integration with QuickBooks Online. Before joining NerdWallet in 2020, Sally was the editorial director at Fundera, where she built and led a team focused on small-business content and specializing in business financing. The IRS may deny some of your deductions and assess penalties if you don’t provide proof to back up your income and expense records.

Real Estate Accounting – 7 Things Agents NEED to Know (2025 Updated)

For example, if you drive to the grocery store after a client meeting, you cannot deduct those miles. However, if you drive directly from the client meeting to the property showing without making any personal stops in between, those miles would be deductible. Use the balance sheet to reflect true ownership flow and rely on management reports for your company earnings. Should I record gross property income or just my management fees in QuickBooks?

What are the core principles of Real Estate Accounting?

• If you want to streamline your tax filing, start reviewing your books in the fall.
• Inaccurate reports may also raise red flags with the IRS, potentially triggering audits or penalties.
• The right accountant should be well-versed in CRA guidelines for real estate expenses to ensure accurate filings and maximize deductions.
• Partnering with an accounting firm can offer numerous benefits, especially for small businesses.

Property managers often fail to distinguish between what’s part of the owner’s books and what belongs to the management company. Skipping bank reconciliations leads to inaccuracies in reporting and can cause issues with owner trust balances, tenant deposits, and tax prep. This ratio compares the amount of debt you’re using to finance your assets to the amount of equity you have invested.

While Zoho Books is limited in direct third-party software integrations, Zoho itself offers a full suite of business apps that integrate seamlessly with Zoho Books. For example, if your marketing spend jumps 15% in one month but your lead count stays flat, that’s worth looking into. Or if your commission income drops by more than 10% compared to your usual average, that could signal pipeline issues, delayed closings, or a drop in conversion rates. Our squad of experts knows the ins and outs of tax laws for realtors and will tailor their strategy to accord with your agency’s specific requirements.

Claiming The Mileage Deduction

This includes recording transactions, creating financial reports, and ensuring compliance with tax regulations. Solid real estate accounting practices provide a clear picture of profitability, helping you make informed decisions about your investments. For a deeper dive into real estate accounting principles, check out resources like Investopedia’s guide to real estate accounting. One of the many ways that it stands out from other accounting software for real estate is its tracking tools and projections. For example, its project tracking tools include time tracking, mileage tracking, and expense tracking that can be divided into projects.