A lot of people write off bookkeeping. They don’t think it’s essential to their business. In the real estate industry, bookkeeping is one of the most important parts of your business. If you cannot accurately give books and records, you cannot accurately project cash, understand your financials, and you can’t make decisions on those financials, which are three things that are hugely important in the real estate industry.
People try and go by gut feel all the time. If you were in real estate in 2008, you know that gut feeling is not the way to run a business. Accurate bookkeeping is crucial to financial success in the real estate industry.
Here are three things that your Bookkeeper should be doing:
1. Bookkeepers should be keeping up with your books every single week.
If they don’t keep up with your books every single week, then they’re probably getting behind, and they are going to do subpar work because when you get behind on anything, the work is not as quality as it could be if they were keeping up with it week by week. Not to mention the week by week reporting is much better than monthly reporting for you.
2. Bookkeepers have to have real estate experience.
They have to know the inventory; they have to know how to book a HUD statement. They have to know how to capitalize on an asset. They have to know all of these things that are specific to the real estate industry. If you bring in somebody that hasn’t had bookkeeping experience in the real estate industry, or maybe they are your office manager, and you think they can handle the bookkeeping, you’re incorrect.
If you rely on those people to give you accurate financials, you’re going to be making decisions off of inaccurate financials, which is probably even worse than creating an off of your gut decision.
3. Bookkeepers should be able to create a set of work papers that prove the books are right.
In anything, you can say something’s correct, but unless you can prove it’s accurate, they are all just numbers on the page. What we say is they should be able to put together a set of work papers that accurately make the balance sheet correct. If the balance sheet is ultimately correct, then the P&L has to be correct.
It has to be categorized correctly. That’s a whole different thing. If you are not putting time and energy into bookkeeping or if you don’t have a good bookkeeper, I highly recommend 2020 to be your year to get a good bookkeeper and get the financials you deserve to make decisions that you need to be making.
Give us a call if you need any help with bookkeeping, taxes, and financials.
We’re here to help you any way we can.