In the real estate sector, the accounting process varies from other business industry and it poses a different set of challenges. Whatever business segment of your firm is; whether you are an agency owner, or the owner of a commercial or residential space that you lease or you are managing a property management team; it has been observed that daily operations and accounting tasks consume a lot of time and efforts that sidetrack you from core business activities those are crucial for the growth of your business. So, here we have discussed some common challenges that real estate accounting poses:
- Change in rules and regulation- Regulation deals with valuation, expenses, ownership, taxes and more, no doubt it’s a challenge for business owners to keep up with such norms. These regulations change on an annual basis, so it’s important for real estate agency owner to work with professionals who can keep your business top of these changes and make sure that you stay competitive in the market.
- Payroll obstacles- Mostly, real estate agencies pay commission to its agents, that means your payroll process is precise and of great importance. Staff paychecks fluctuate week to week, which eventually complicates the payroll process. With the help of technology, you can automate your commission process, but keep in mind that commissions are subject to income tax and keeping records is a must. So at the end, you need an accountant who can accurately manage your payroll process and save your precious time.
- Managing remote employees- The real estate agents are out of the office most of the time. So cloud-based property management software help your agents to be connected and you will have a real-time information on transactions, which is again challenging for owners to track the activity of each and every agent.
- Common accounting mistake- Being from a non-accounting background, it is obvious that you are going to make some accounting mistakes such as incorrect classification of costs, using the business cash for personal use, lack of record keeping and much more. So it becomes necessary to hire a professional so that you can focus on revenue-generating tasks.
A successful real estate owners are those who perform right things in an efficient manner. For instance, business structuring, tax preparation, deduction management and real estate accounting are important aspects that need to be handled diligently. Here are some of the benefits you can earn by hiring an accounting professional for your real estate business:
- Structure the operations in a tax-efficient manner- Typically, accounting professionals participate in budget, planning, investment and tax reporting activities and advise real estate investors or owners to make a wise decision. Usually, the accountant analyzes and records all the real estate transactions that include rentals, property sales, time sharing and leases and help with real-time information.
- Access to accounting twists- The professional accountant usually takes their study time to understand the industry investments on behalf of their employers to master the trends and tax changes that may be relevant for client’s investments. Hence, the professionals work with real estate owners to ensure that there is creative financing. This gives an access to the client’s to understand various twists in the accounting process.
- Hiring other professionals- Professional accountant also helps you hire different professionals that include finding the best insurance agents, attorneys and other professionals because usually, it is a tricky affair for real estate investors. Moreover, an accountant is well acquainted with different business structures, level of legal protection and different financial perspectives.
- Decision making- A well-experienced accountant helps you to make better business decision by analyzing the financial reports who have an attitude of saving a lot of money for your agency. He can advise you better deals and keep you up updated with different tax deduction.
Key takeaways:
It has become a necessity for real estate industry to hire a professional accountant who can manage their real estate accounting process with efficiency. But, hiring an in-house accountant is a costly affair. Nowadays, every industry is outsourcing accounting process to reliable third party companies to grow their business in a right direction because, “ It’s about your company, your business, your success”.
