Whether you are a commercial or residential landlord, managing a property portfolio can be complex. Award-winning Xero add-on Re-Leased is designed to manage entire portfolios, no matter how varied, through a single application.
What is Re-Leased?
Re-Leased offers property management and accounting in the cloud that syncs seamlessly with Xero to help you run your business.
Why should you be using it?
Real estate accounting can be complex, so you need the right tool for the job. Spreadsheets weren’t designed to cope with this data; you need software that’s easy to use and capable of handling all your transactions.
• Update your accounts securely from anywhere, even when on-site with clients.
• Quickly and easily share real-time financial data with your accountant or bookkeeper.
• Track your portfolio’s performance from anywhere, anytime – on any device.
• Automate much of the work, with scheduled payroll and direct bank feeds.
• Reduce your IT overheads – no servers required.
• Get access to powerful reporting tools.
Why is it great for real estate accounting?
If you work in real estate, then you likely deal with large sums of money on a daily basis. This is true whether you:
• Run a real estate agency employing commissioned salespeople.
• Manage commercial or residential real estate for clients.
• Handle the accounts of a housing association.
• Run a building construction firm.
• Manage an investment trust.
• Provide residential sales and lettings services.
Integrating Re-Leased with Xero software can save time and ensure data is up-to-date, meaning you’re managing your money well and you avoid costly mistakes for you or your clients.
Issues to be aware of
The real estate industry forms a major part of the national and global economy, and accounting regulations are designed to:
• Make the most of real estate’s contribution to GDP.
• Encourage wealth creation and distribution through investment.
• Try to prevent a repeat of the mistakes leading up to the global financial crisis of 2007.
The regulations in force don’t always achieve these goals, but they are the rules that you must follow. In particular, some countries now have stricter rules about:
• Ownership transfer and identification.
• Money laundering.
• Valuing commercial and residential real estate.
• Offsetting expenses.
• Land, property and inheritance taxes.
• Managing and accounting for clients funds.
Always estimate the value of your real estate
In other types of business, stock has a clear and specific value. But in real estate, transactions are less frequent. One house or office block might remain in the same hands for years or even decades, so it can be hard to figure out what its value is today.
Most real estate valuations are based on estimates. Until a transaction takes place, the real value is unknown. So, estimates of value are part of selling or managing real estate for clients and are usually based on recent sales of similar real estate in the same area.
Accurate asset evaluation is essential for accounting purposes as taxes and other charges are often based on value.
If you inaccurately value the real estate you manage or sell, you could be liable to prosecution. So follow valuation regulations carefully, and use Re-Leased to keep accurate records in your accounting software.
Can Re-Leased and Xero help with paying your staff?
Real estate businesses often hire staff based on commission, or a percentage of the rental income they manage. Some use a combination of a fixed salary plus commission.
For agencies in particular, it makes sense to offer salespeople commission for completed sales. This is a big incentive for them to work hard. However commissions can make payroll more difficult, since your staff payments will fluctuate.
You can make this simpler by using the payroll features built-in. Completed transactions can be assigned to particular staff members, with commission calculated automatically.
Remember, commissions are subject to income tax. It’s important to keep track of the figures so you withhold the right amount of tax.
Is it versatile and mobile?
Yes! If your staff work remotely or need to complete tasks while they’re out and about on a job, then cloud-based software is ideal.
It gives your staff the freedom to work from anywhere, at any time, on any device: a real advantage in the property industry.
It’s vital to be thorough when accounting for operational expenses. If you fail to account for every cost, you or your clients could lose money.
Will your be data safe and accessible?
Property businesses are sometimes targeted for audit by government tax inspectors. This can be a stressful time for your business – and an expensive one. Government officials will go through your accounts in fine detail. They will be looking for anomalies and asking questions.
The tax office could audit you at any time, so it’s vital you keep your records safe and accessible. Good accounting software will help you do this, with an audit trail of every transaction. This simplifies the audit process and you can immediately call up any record for inspection.
It also makes sense to talk to your accountant about audit insurance. This may cost a little extra, but it means you won’t have to pay a much larger sum to your accountant if you are audited.
Counting the costs
Financial reporting is a big part of real estate accounting. If you manage client holdings or housing association properties, there’s a lot to take into account. The same is true if you run a building construction firm.
It’s vital to be thorough when accounting for operational expenses. If you fail to account for every cost, you or your clients could lose money. Different countries have different rules about permitted expenses. Make sure you understand those rules.
Hiring a good bookkeeper makes sense here. A bookkeeper will deal with your accounts on a daily basis to keep all the figures up-to-date. That helps ensure that every transaction is accounted for, and every cost recorded.
Be a real estate professional
If you want to run a successful real estate business, you have to take accounting seriously. That means using every possible resource to help you get ahead.
Hiring a good accountant and bookkeeper will give you an immediate advantage.
Using cloud accounting software is also important. It will allow you to work closely with your accountant and bookkeeper.
Xero and Re-Leased will streamline your accounting work, and provide you with more time to grow your business.
Fortunes are made and lost every year in real estate. The people who succeed are the ones who plan well, and take accounting seriously. With careful control of the figures, you can build a solid business that stands the test of time.
Get in touch with Flow today to see how we can help integrate cloud accounting software into your business, call us on 0330 123 5577 or email email@example.com