In any small business you need structure. You need procedures and methods in place to minimise disorder and to ensure that you have control over your cashflow i.e. what money is coming in and what money is going out.
These systems can be anything from an Excel spreadsheet to a cloud based application such as Xero or Quickbooks.
All the above apply to ANY small business but here at Positive Accounting we specialise in bookkeeping for property investors and developers so the rest of this blog will concentrate on that area of business.
So, what do you need to capture in your system to keep you in control?
It is obvious that as a property investor who buys property to rent out you need to know what rental income you have coming in per property, but also you need to be able to break down your outgoings per property.
If you have one or two properties a simple spreadsheet will suffice. Have three separate sheets, one for Income, one for Cost of Sales and one for Overheads.
For Income (per property), the things you should record are Rent, Interest Income, Other Revenue and Admin Fees.
For Cost of Sales (per property), the things you should record are Cleaning Services, Council Tax, Deposit Protection Fees, Insurance, Letting Agent Fees, Mortgages, Purchase/Finance Fees, Repairs and Renewals, Broadband, Utilities.
For Overheads (not per property, these costs are the costs incurred in running your business) Advertising & Marketing, Audit and Accountancy fees, Bank fees, Client Gifts, Consulting, Directors’ Remuneration, Entertainment (100% business), IT Software & Consumables. Land Registry, Legal Expenses, Light Power & Heating, Postage, Printing & Stationary, Professional Fees, Repairs & Maintenance, Staff Training, Subscriptions, Telephone & Internet, Travel (UK).
If you would like to have the above spreadsheet sent to you simply email firstname.lastname@example.org requesting it and we will happily send you a copy.
Going forward, as you portfolio grows or if you have more than a few properties it make sense to use a dedicated application such a Xero or Quickbooks. These applications provide far more reporting power than a simple spreadsheet giving you the ability to really drill down into your numbers.
We are happy to provide a free 30 minute telephone or Skype consultation to help you understand where you are in your business now and where you would like to take it in the future. If you would like to take advantage of this offer please email email@example.com
Positive Accounting – Looking after the business owner.