The quality of your rental property accounting will directly impact your ability to create a successful rental business.
Written by
Ben Luxon
PUBLISHED ON
19
Dec
2022
The quality of your rental property accounting will directly impact your ability to create a successful rental business. As such, it is vital to always be on the lookout for new solutions and tools that will allow you to improve your efficiency.
Thankfully, there are numerous tools available on the market today that not only will increase your accuracy and efficiency for routine admin tasks such as income and expense tracking for your rentals, but also allow you to improve the efficiency of all your property management activities. In this article, we take a look at how you can identify and adopt tools that will allow you to improve your rental property accounting.
There are a few best practices, which need to be adhered to in order to keep accurate, up to date books, and stay compliant with new tax regulation changes coming into play, such as making tax digital.
What you do not want to be doing is combining your personal accounts with multiple different property accounts. Doing so will mean scrolling through thousands of transactions and paper receipts for the year.
It’s much easier to simply set up separate bank accounts and manage transactions specific to each property via those accounts. Not only does this make it far easier and faster to identify relevant expenses, but it will allow you to much more easily get granular insight into the financial performance of each property. With these insights, you can make informed decisions to improve the profitability of your rental business.
One of the major pain points for any landlord and any accountant is the vast administrative task that comes with not keeping your books up to date. Leaving your accounting the last minute invariably leads to many expenses being overlooked, and whilst these expenses might only be £1 or £2 at the time, they can quickly add up to become thousands in the long run.
All of your paperwork can be digitised and stored securely on cloud-based platforms. When digitising your receipts, you want to look for a solution that will allow you to take a picture of the receipt, at the point of sale, and store it securely with that transaction in your record-keeping.
It is also recommended to store it in a second place, in a folder in Google Drive or OneDrive for example, so that you never lose the receipt.
Ideally, as we’ve said, you will be keeping your books in real-time, you will have separate bank accounts for each property, and in order to ensure that all of your income and expense tracking is completely accurate, you should also have a plan to reconcile all data entered into your bookkeeping system against the transactions in your bank statements, leveraging open banking innovations.
Thankfully, all of the best practices that we’ve outlined so far in this article can in fact be optimised and implemented through the use of the right software solutions.
Open banking innovations, allow for financial management apps to seamlessly and securely connect with your bank so that you can access your financial data without having to flip between different apps through printed statements. Instead, you can log into an app like Landlord Studio, open up the bank feeds feature, and hit the reconcile button to record that income or expense accurately and quickly, reducing the need for manual data entry, and the possibility of errors.
Whether you like technology or not, by April 2026, you will need a system in place to keep digital records and submit your taxes according to the HMRC’s MTD guidelines. This change can be thought of as an opportunity to upgrade your systems and processes to save yourself time and increase the profitability of your rental business.
And with a solution like Landlord Studio, you can improve not only your rental accounting processes but also many of your property management needs. Landlords studio, for example, will allow you to connect each of your bank accounts for your properties so that you can view transactions in real-time and reconcile your income and expenses with a simple tap of a button.
This removes the need for manual data entry, increasing the accuracy of your tax returns, and the potential for errors, whilst simultaneously giving you greater insights into your portfolio’s finances.
Additionally, it has various other property management features including a mileage tracker. You can also easily digitise receipts through the app with your phone camera and the Smart Scan software will read the details of the receipt and automatically input them for you.
Its property management features include:
All of this is designed to help you improve your business and can be done through the app, or via desktop, meaning you can manage anywhere at any time.
You need to track your income and expenses, and with changes in regulation, such as making tax digital deadline you need to be using bookkeeping software.
And if you don’t know your numbers, you simply won’t be able to tell whether your business is making money, let alone if you’re going to be able to scale your portfolio or pay for unexpected expenses.
The true advantage of bookkeeping software for landlords is that you can hold all the basic information about the property and manage various important property management tasks in the same place that you keep all of your financial data at the push of a button.
You can generate a professional report, and understand exactly what is and what isn’t making money in your rental business, you’ll be able to see whether you have missed or forgotten, an important bill, or expense and. Put simply, you will be able to file a much more accurate tax return with far greater ease whilst maximising your deductibles.
Landlord Studio provides you with regulated account information services as an agent of Plaid Financial Ltd., an authorised payment institution regulated by the Financial Conduct Authority under the Payment Services Regulations 2017 (Firm Registration Number: 804718) for the provision of payment services, including account information services.