Hello everyone. This is Juan Carlos Gastelum. I am a real estate investor in Texas. Today we’re going to continue our discussion on building your team. Remember we had mentioned the importance of building your core four. And those were 1) your broker or real estate agent that you can trust, 2) a reputable lender that understands your financial metrics and goals, 3) a reputable property management company or a property manager, and 4) your accountant. Before we get into discussing your accountant, we want to dive into the prior step with respect to the input to be delivered to your accountant, meaning all your expense reports and all your income reports so that your accountant can prepare your tax returns, while guiding you towards making better decisions for achieving financial goals and benefiting from the tax incentives that the government and applicable law offer.
Regardless if you are doing your bookkeeping by hiring a bookkeeper or doing it on your own, it is very important that you keep track of your income as well as your expenses. Sometimes keeping a record of your expenses can be a bit painful because you have to keep track of all the different bills that you’re paying out and who you’re paying them out to, whether or not they’re deductible, whether they’re business expense or a personal expenses that may not fit into your tax deductions. So it’s very important that a good system is put in place so that proper bookkeeping can then deliver the correct input to your accountant.
Now, in order to have a good bookkeeping system that is efficient for your accountant, it is important that you keep track of each individual and itemized record of the income, including the source and the amount, and you keep track of every single expense, including amount and payee to whom that expense is going towards. A simple tool to use is an Excel spreadsheet to create a personal budget, a personal balance sheet with your income and expenses, and a personal networth worksheet, which just means having a record of your assets and your liabilities. Once you get used to using these on a daily basis, you’ll become more familiar with working with your numbers and preparing the information to provide to your accountant. There are many softwares that are available to facilitate this task. For instance, QuickBooks Online is an affordable method for keeping track of your income and expenses and a great tool to use when providing your bookkeeping to your accountant. So our tip for today is to either use a simple Excel spreadsheet or just buy a software license online like QuickBooks to start creating those daily entries of income and expenses and keeping track to provide the necessary input to your accountant. So that’s it for now. Take care. Best wishes on your real estate journey, and God bless!
