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Updated over 1 year ago,

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Julio Gonzalez
Pro Member
#4 New Member Introductions Contributor
  • Specialist
  • West Palm Beach, FL
1,459
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4,299
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Accounting Tips for a Successful Business

Julio Gonzalez
Pro Member
#4 New Member Introductions Contributor
  • Specialist
  • West Palm Beach, FL
Posted

Accounting is very crucial in the success of a business. Keeping your books and records in order can be a huge task, but it’s vital in allowing you to make informed decisions, have accurate financial records and ensure you are in compliance with regulations. Here are some helpful accounting tips that should provide guidance on how to optimize cash flow, streamline financial operations and maintain long-term financial health.

  1. IMPLEMENT BUDGETING AND FORECASTING. This is HUGE in order to gain control over your finances. Sit down before the start of each year and create a budget with forecasted cash flows including revenues and expenses. Then track each month’s actual income and expenses against your estimated budget.
  2. KEEP UP-TO-DATE ACCOUNT PAYABLE. Be sure to track upcoming expenses that you know you’ll have but haven’t yet paid. Then use this list when making financial decisions to ensure you have the funds in your account when the bill comes due.
  3. PRIORITIZE YOUR ACCOUNTS RECEIVABLE. This helps you see which tenants have paid, which tenants are late on their payments and when to assess late fees. You want to stay on top of this because if you have tenants who pay late, but you aren’t tracking it, so you aren’t aware of it, they may get in the habit of paying later and later each month which can be a slippery slope.
  4. KEEP YOUR BOOKS UP-TO-DATE. You should be updating your books weekly at an absolute minimum. Be sure to review your weekly and monthly cash flow. This helps you stay up-to-date on funds needed in your account, the profitability of your business, etc.
  5. INVEST IN ACCOUNTING (INCLUDING A BOOKKEEPER AND EFFICIENT SOFTWARE). Inaccurate accounting can set you back in the short term and long-term. Take the time to find a good bookkeeper or CPA. Ask what software they use and it’s best if it’s something other than Excel which is manual thus errors can easily be made.
  6. INVEST IN YOUR COMPANY. It’s easy to spend the extra income earned from real estate investments to fund our lifestyles. However, focus on investing that money back into your business. Are there renovations that could be done to increase the rents on a property? Could you put the money towards a new property? Do you need to hire someone to do your bookkeeping or property management so you can use your time to source new deals? Find ways to put your money back into your real estate business.
  7. AVOID TOO MUCH DEBT. While debt is a key element of real estate investing, ensure you aren’t taking on too much debt. It’s easy to rack up credit card bills when flipping a property or furnishing your new AirBnb, but be sure you aren’t overleveraging yourself and that the costs are within budget.
  8. ENSURE YOU HAVE CASH RESERVES. This is absolutely crucial in real estate investing. Everyone has a different formula or risk tolerance when it comes to determining how much you should keep in reserves. Regardless, ensure you have the funds in case one of your properties suddenly needs a significant repair or if you have an unexpected vacancy.
  9. REVIEW AND ANALYZE YOUR MONTHLY CASH FLOWS. Be sure to know and understand how much money is coming in and going out each month. If you have your personal and business account transactions intertwined, the first step is to separate those in order to gain a better understanding of your business cash flows.
  10. UNDERSTAND KEY PERFORMANCE INDICATORS (KPIs) AND CONSISTENTLY REVIEW THEM. This is the key to financial fitness. Review performance metrics such as net operating income, gross profit margin, return on investment (ROI), cash-on-cash return (CoC), etc.
  • Julio Gonzalez
  • (561) 253-6640
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