Accounting and Bookkeeping Tips for VRBO and Airbnb Owners
1. It’s the little things
It’s the little things that you buy that are often forgotten to keep the receipt for and you miss, but we all know that even a few dollars here and there add up so even if it is just a little thing of soap, why would you not want to account for every expense that reduces your actual income?
2. Open that separate account
You can open a bank account for free on Azlo without even putting a dime in the account, or just open an additional one with whomever you bank with so you can transfer funds between your regular bank account and your rental bank account. Now, you all money flowing in and out should go through that account first, even if you transfer some of the funds into your personal afterward (that’s totally fine) because you have a perfectly clean account for income and expenses related to your rental(s). Best of all, almost all accounting software will allow you to set up an automatic feed for transactions to account for each and every item you will need at tax time, leading to our number 3 tip.
3. Get yourself a subscription to a cloud-based accounting software
Yes, Cloud-based because it is the year 2020 and you don’t want to be tied to your desk. There are other benefits too. It is unlikely that you have spent all of the money on the same security systems that the very large companies like Quickbooks and Xero have paid to secure and encrypt their servers along with constant backups to protect the loss of data. Your data is much safer on cloud-based software and you can even access some from an app. There are options for all budgets (even free) but you do get what you pay for.
4. Set up a mileage tracker
You find yourself running errands to the Home Depot and Walmart constantly for your rental, but are you tracking that? Turn on that mileage tracker and track when you are doing it for business or personal. You need both so you can determine your % of business use if you are going to deduct a cost basis for your vehicle expenses or you can just take the standard mileage deduction rate. Either way, you should turn one on your phone, and did you know Quickbooks Online includes one on their phone app? This software is quickly paying for itself!
5. Get yourself a GREAT bookkeeper
Your tax preparer will file your taxes at the end of the year based on the information you provide. A really good bookkeeper should be the advocate to ensure you give the tax preparer the absolute best information to help your bottom line. They should be ensuring everything is kept current, organized, and ready even if it is the middle of the year and you need financial statements for supporting a loan for acquiring a new rental property. Better than that, a great bookkeeper is going to save you more than they cost you because they are helping you watch your expenses, suggesting ways to increase your income and decrease your expenses as well as helping you minimizing tax costs. That way, you are earning more profit and they are saving you a lot of time to enjoy the fruits of your labor! I haven’t had a customer yet that I didn’t catch an expense they really hadn’t paid attention to until working with me at Upkeep, LLC. It could also be quarterly assistance and split the work between you and the bookkeeper, but to really do it right, your bookkeeper can be your best friend. Call me today at 865-622-7899 and we can talk about how to get yourself more profitable!
The bottom line, treat it like a business because it is. Use the right tools to get your business where you would like it to be - making great profits and growing the way you want it to!