PM101: Bookkeeping for Property Management Virtual Assistants
Your property management company requires a specific focus on important tasks and details for success. One of those topics is bookkeeping. However, good bookkeeping practices involve much more than just how much money is coming in and going out.
Property managers can benefit by hiring a property management virtual assistant to keep the books accurate. That's especially important if you're not familiar with bookkeeping and want to keep that particular function "in-house" as much as possible.
You could hire an accounting or bookkeeping firm or bring on a full-time employee with bookkeeping experience. Still, neither one of those options are necessarily ideal for a small or medium-sized property management company. Instead, hiring a VA who knows bookkeeping can be the right way to have confidence and peace of mind for the future. Here's what your VA should know about fees, ledgers, statements, and more to handle bookkeeping tasks for your property management company.
Why Good Bookkeeping Matters for Property Managers
Property management companies must keep track of money coming in from tenants paying rent and money going out to property owners, maintenance people, and others who help with renting and leasing properties. When you hire a virtual assistant, you have someone who can help manage the financials for your company. They can also look at taxes, and local laws and make sure your records are accurate to comply with all regulations.
The right assistant may have general knowledge of bookkeeping and accounting. However, having that insight with a focus on real estate or property management can be incredibly important for your company's success.
What Does a Property Management Virtual Need to Know About Rental Property Finances?
Your VA should understand some specific bookkeeping insights regarding rental property finances. Take time to train your virtual assistant, so they understand these important things, including:
Keeping separate accounts: It's not safe (or legal) to put every penny that comes and goes into one big account at your property management company. Instead, work with your virtual assistants to put tenant security deposits into escrow, for example. Also, make sure each property has a maintenance account to cover routine or emergency repairs.
Understand different transaction types: Every transaction needs to be properly recorded, and part of that is labeling the transaction correctly. For example, if your virtual contractor lists something as a maintenance cost when it's actually taxes or some other type of fee, your books won't balance correctly, and you could miss important information.
Label tenant transactions accurately: Every transaction that involves a tenant should be labeled with that tenant's name and other identifying information. Otherwise, your company is at risk of miscrediting a tenant or causing a bookkeeping anomaly.
Keep property transactions separate for each property: Just like labeling tenant transactions is important, the same is true for property transactions. A virtual property management assistant must treat and track finances for every property as separate entities with accurate information.
All business transactions aren't created equal: A transaction for a commercial building is far different from one for a residential home. Keep transactions separate, and make sure your VA logs them into the right categories.
By choosing to hire a virtual assistant, you're giving up some control over your bookkeeping details. That's why it's essential to make sure you're hiring the right assistant. Make sure they have the training to handle your books accurately, so you feel secure in letting them manage your company's financial information.
Use Property Management Software for Accurate Bookkeeping
One of the ways you can help your property management virtual assistant do more for your company, and reduce any risk of error, is through the use of property management software. This can provide more accurate bookkeeping than spreadsheets or handwritten ledgers, so you don't need to worry about the details.
While accurate input and information are still very important, the right software can help catch issues and concerns so they can be corrected before they become problematic. Property management software helps business owners track income and expenses accurately.
Single-Entry vs. Double-Entry Bookkeeping
As you make decisions about the finances of your property management company and how to handle them, determine whether you want to use single-entry or double-entry bookkeeping. What's the difference?
Single-entry works with just one entry per transaction, while double-entry involves two: one debit and one credit. Essentially, single-entry bookkeeping is focused on the cash coming in vs. the cash going out, which makes it less detailed. Double-entry bookkeeping has categories for assets, liabilities, revenue, expenses, and equities. No matter which option you choose, make sure your virtual assistant understands how to track income and expenses accurately.
No matter which method you choose for your bookkeeping, make sure you practice regular reconciliations. In other words, work with your VA to reconcile your accounts and balance your books frequently to ensure everything stays accurate. If you reconcile regularly, you'll catch any issues quickly and get them fixed. On the other hand, by waiting a long time to reconcile, a problem that was very small at the beginning could have grown quite a lot and may be significantly harder to trace back and correct.
Hiring a professional bookkeeper is one of the ways to avoid issues and reduce risks, and that's where a property management virtual assistant comes in. Many VAs already have bookkeeping skills or accounting experience, so you can find a capable VA by looking for the experience you need.
Before hiring your virtual assistant, ask about their skills and vet them to find one with the bookkeeping knowledge you're looking for!
Hire a Virtual Assistant for Your Property Management Bookkeeping Needs
Ready to hire a virtual assistant? You can find the right VA for your property management company through VPM Solutions. When posting the job description, be specific about the experience and skills your need. Then search available VAs to find the talent you need.
Learn more about hiring virtual assistants! Download the "From Chaos to Clarity" case study.