As a real estate investor, you aren’t a lone wolf. Surrounding yourself with a team of professionals who can help maximize the profitability of your business is essential. So do you need your real estate investment team? We will look at them in our blog series, “Your Real Estate Investment Team.” Today we are looking at the pros who make your dollars make sense: your accountant and your bookkeeper.
Accounting vs. Bookkeeping: What’s the Difference?
Before getting into the benefits of having these professionals on your team, let’s define what makes them unique. Many people lump bookkeeping and accounting together. You can find a professional who will perform both roles for you, but they often stay in their own lane. While an accountant can be considered a bookkeeper, a bookkeeper can’t be an accountant without the proper certification.
Bookkeeping Is a Transactional and Administrative Role
Bookkeepers handle day-to-day tasks like:
- Recording financial transactions
- Posting debits and credits
- Producing invoices
- Managing payroll
- Maintaining and balancing ledgers, accounts, and subsidiaries
Some people like to hire a bookkeeper to clean up their books and get them on the right track. Then, they use reputable bookkeeping software such as QuickBooks to maintain their financial records. What you do will depend on your overall level of organization and the time you wish to devote to bookkeeping.
Accountants Provide Financial Insights
Accountants handle tasks like:
- Analyzing business performance, helping the business owner understand the impact of financial decisions
- Verifying and analyzing data
- Generating reports and performing audits
- Preparing financial reporting records like tax returns, income statements, and balance sheets
- Providing information for forecasts, business trends, and opportunities for growth
- Adjusting entries
Because they are an expert, an accountant can do in a few hours what would take you days to accomplish in accounting tasks. And they will likely get you more tax deductions, as well.
Know Your Financial Health for Easier Investing
Bookkeeping generates data about the activities of a business, while an accountant turns that data into information. An investor often has a bookkeeper who manages their day-to-day finances, keeping the bills paid and books reconciled. Then, usually, at tax time, the investor will bring these beautifully organized books to their accountant.
When you want to buy or sell property, you will have a far easier time if your books are in order. The lender can make a sound decision, and the other party in the transaction will feel secure with solid numbers.
Cost Segregation and Your Financial Health
When investing in real estate, whether a commercial or residential rental property, it is vital to have a cost segregation study done. Your accountant can use the study results to reduce your tax burden significantly. Find out how much you can save!
Get a no-cost, no-obligation estimate today!