A bookkeeper can be a great addition to your real estate investing dream team because they help you manage the day-to-day financials of your investment properties.
While they don’t provide the strategic tax guidance of a CPA, their role is to ensure that your income and expenses are tracked accurately and that your financial records are well-organized.
This is especially important as you build your portfolio and need to keep detailed records for tax purposes and financial reporting.
What Do They Do?
Bookkeepers handle the tracking and organization of your financial records, making sure everything is recorded properly from the start.
They focus on the details of income and expenses, which is critical for understanding the profitability of your investment properties and preparing for tax season.
Here’s what a bookkeeper typically handles:
- Setting Up Your Books Correctly from the Start – A bookkeeper will set up your financial records in a way that makes it easy to track rental income, property expenses, and other important financial information. If you have an entity, such as an LLC, they’ll ensure that the books are structured properly for your business.
- Tracking Income and Expenses – They record all transactions related to your rental properties, including rental income, maintenance costs, property management fees, and mortgage payments. This ensures that you have a clear picture of your cash flow and that you’re prepared to hand over accurate records to your CPA when it’s time to file taxes.
- Managing Financials from Entity Formation Through Ownership and Rental – From the moment you form your entity to the time you begin renting out your property, a bookkeeper helps ensure that everything is in place financially. They maintain consistent records throughout the life of your investment, making it easy to review your financial health at any time.
- Collaborating with Your CPA – While your CPA focuses on tax strategy and preparation, your bookkeeper ensures that all the day-to-day financial information is accurate and organized. This division of labor helps streamline your financial management and tax filing process.
When Do You Involve Them?
You’ll want to involve a bookkeeper as soon as you form your entity or make your first property purchase.
Getting your books set up properly from the start will save you time and money down the road.
As you acquire more properties, your bookkeeper will become even more valuable, helping you keep track of multiple income streams and expenses.
Why Are They Important?
Having a bookkeeper allows you to stay organized and ensures that your financials are always up-to-date. This is critical for making informed decisions about your investment properties, tracking profitability, and preparing for tax season.
Here’s why bookkeepers are an important part of your dream team:
- Accuracy and Organization – They ensure that all your transactions are recorded accurately and that your financials are organized in a way that makes tax preparation easier and more efficient.
- Ongoing Financial Management – By keeping detailed records, bookkeepers help you stay on top of your finances throughout the year, allowing you to make better decisions about your portfolio. And, making it much easier to apply and qualify for loans, raise money and attract partners.
- Cost Efficiency – Bookkeepers generally cost less than CPAs. By handling the daily financial tasks, they free up your CPA to focus on more strategic tax planning and preparation, which can save you money.