For every business alike, it is extremely important to keep the finances in order. Real estate businesses often do not survive because of horrible financial management. If you are small real estate business owner, and are looking forward to double your profits in a year, adequate accounting and bookkeeping will come in handy.
Professional bookkeeping is very important for the success of any real estate business. You can either outsource a professional for bookkeeping or manage your accounts by hiring an accountant in your company depending upon your business priorities. In this way you improve the chances of high profitability continually.
This article aims to help you identify the areas of mistake that real estate owners can avoid.
Using Personal Bank Account for Transactions
Personal bank accounts operate differently from the personal records. Many real estate owners resort to using personal accounts for business purposes. This practice leads to mismanagement and discrepancies.
Instead of mixing things up, make sure you open separate bank accounts for the business purposes, so as to adequately manage the finances with the help of bookkeeping and accounting firms in Dubai, to ace business finances and accounts. One bank account for personal transactions as well as real estate business, will be a recipe for disaster. The regulations related to business accounts are different from the personal accounts, and the professionals will help you maintain your bank accounts keeping in view those requirements.
Using Personal Debit Cards for Business Purposes
Do you use personal debit and credit cards for business purposes like many real estate businessmen? Many real estate investors indulge in similar practices which negatively influence the extent of profitability of your business.
It is as drastic a mistake as using personal account for professional work. Thus, make sure you dedicate a separate debit card for each purpose. In this way, you will be able to manage accounting and record keeping with excellent level of accuracy.
Poor Records and Bookkeeping
For every business and organization, accounting and recordkeeping very important. When real estate businesses have a poor level of record keeping, they are more likely to lose track of important details. Sometimes, you may need to revisit the receipts of renovation materials used for a building or reproduce some evidence for a legal faceoff.
In this scenario, poor record keeping can be deadly for you’re the future of your business. Make sure you do not leave the small transactions unrecorded because poor and inaccurate records can come back to haunt you at any point in future.
Non-reconciliation in Bank and Credit Accounts
Record keeping is important for all businesses alike but there’s more that you need to take care of. You need to make sure that you reconcile your bank accounts with the credit accounts. In order to get a clear picture of your business finances and accounts you must avoid this mistake of not reconciling credit accounts with your bank accounts.
You need to be sure of how much you owe and own in terms of cash and equity. Do not hesitate to take some time out of your busy schedule every week or alternate weeks for balancing the books.
No Maintenance of Business Data Backup
Digitizing your business is important for streamlining the operational practices and process, but you need to utilize the digital technology to its fullest potential. Thus, instead of sitting tight, make sure you take care of your investments by resorting to your backups. Back you data up digitally, so that the real estate is accessible at any time.
For backup purposes you can either go for your own digital system, or cloud storage besides maintaining paper records. You can seek professional help for accounting and bookkeeping for backed up business data as well. In case of audits and digital systems fails, you will need to resort to paper trails, thus backups need to be multi-faceted.
Avoiding Accounting Mistakes is Essential for Success of Real Estate
For every niche, there are some hacks for getting on to the trajectory of success. Similarly, there are some mistakes which prove deadly for a field if the effects are not mitigated in due time. In real estate, these mistakes include using personal bank accounts for business purposes. You need to reconcile the credit accounts with bank accounts. You must also ensure avoidance of poor record keeping.
Categorizing of payments and expenses needs to be adequate. Be certain that you seek professional help where needed and not try to do it all on you own. Keeping records and accounts free of inaccuracies and misrepresentations is important for yearly audits as well. Thus recordkeeping and accounting despite feeling like a hassle is essential for your real estate business.
Make sure you avoid these common bookkeeping mistakes at all costs.