Estate accounting software is helpful for businesses that need to keep track of their client’s money. This type of software is especially important for a company or organization that deals with a large number of customers, and helps them efficiently keep track of their finances in one place. Here is more information about how Estate Accounting Software works, and why it’s valuable to your business.
In this guide, we review the aspects of Estate Accounting Software, property management accounting software, best accounting software for commercial real estate, and How do I prepare a real estate accountant?
Estate Accounting Software
Estate accounting software is used by companies and organizations to keep track of the financial records of their clients. It can be helpful, especially in the event that a customer needs an accurate record of their finances. The following sections will cover how estate accounting software works, what types are available, and how it can help you manage your customers’ money more effectively.
Estate accounting software is widely available for a variety of industries and organizations.
Estate accounting software is widely available for a variety of industries and organizations. This area of software development has seen rapid growth in recent years, as more and more people are choosing to plan their estates before they die.
It’s important to note that estate accounting software is not just for those with extensive assets or property—it can be used by anyone who wants to keep track of their finances, even if you only have a few dollars in your savings account.
When selecting an estate accounting system, it’s critical that you find one that will work best for your needs. The purpose of estate planning may vary depending on your situation; however, there are many things that should be considered when choosing an estate accounting system.
Some account management software can be used directly by the entity, while other programs are intended to be used by accountants and CPAs.
You might hear the terms “in-house” and “professional” accounting software. What’s the difference between the two?
In-house accounting tools are designed for use by businesses, nonprofits and other organizations that want to keep track of their accounts on their own. These programs usually allow you to record transactions, create invoices, manage vendors and sales leads — all the basic functions required in most businesses. Many users describe these programs as user friendly because they’re easy to learn and don’t require extensive training before you can begin using them effectively.
There are a number of key factors to consider when purchasing estate accounting software.
It’s worth taking the time to consider these factors before making a purchase, as they will make it easier for you to implement and use your estate accounting software in the future.
- Cost: The cost of estate accounting software can vary greatly depending on what kind of tool you decide to invest in. Some programs are free to download and use, while others require an annual fee or monthly subscription. It’s important that you choose a product that fits within your budget; otherwise, it may be difficult for your business to grow over time because of financial constraints. Make sure that the cost is reasonable given its features so that there aren’t any hidden fees down the line when trying out different options!
- Ease Of Use: This factor should be considered alongside other criteria such as cost and compatibility with existing systems because ease-of-use has a direct effect on productivity levels — if employees struggle with using their tools at work then productivity will go down which could lead company profits suffering too!
Estate accounting software can be used to maintain accurate records.
Estate accounting software can be used to maintain accurate records. This section covers the basics of what estate accounting is and how it works.
As you may guess, estate accounting involves maintaining accurate records of transactions related to an individual’s assets or liabilities. The process includes tracking accounts receivable and payable, as well as inventory, assets and liabilities. It also means managing budgets for income and expenditures, plus tracking cash flow in order to make informed decisions about whether your business will be profitable in the future.
Finally, estate accounting software helps you generate financial statements that show how much money has come into a business or trust over time while showing how much money went out during that same period (this is called profit & loss).
It can also help entities prepare financial statements and find the best way to apply funds.
Estate accounting software can help organizations prepare financial statements and find the best way to apply funds. These solutions also provide a better understanding of your organization’s financial position, which can help you find ways to improve your business.
Estate accounting software has many uses and benefits.
Estate accounting software has many uses and benefits. If you are the executor of an estate, the software can help you manage your estate. For example, it can assist with asset tracking, including bank account management and stock portfolio management. The software can also be used to produce financial statements for lenders or beneficiaries as needed.
Additionally, if the entity does not have its own internal finance department or accounting department (such as a family trust), it may be useful to use this type of software so that its funds are invested properly and reported on annually by accountants or CPAs who are familiar with how these types of systems work.
property management accounting software
Even the smallest property management companies have a lot to manage — collecting rent, managing lease agreements, fielding maintenance requests and more. Therefore, busy property managers need accounting software that goes beyond accounting.
The best software solutions are easy to implement and use, cloud-based and grow with your business. If you don’t want — or don’t yet need — an all-in-one solution, then your property management accounting software must also integrate with an off-the-shelf accounting package.
Additionally, if you have multiple LLCs within your property management business, you’ll want to keep in mind that many property management accounting software options (including those listed below) require separate subscriptions for individual LLCs.
Here are recommendations based on the size and needs of your property management company.
1. QuickBooks Online
Best for very small or new property management companies.
Although it’s not strictly a property management accounting software, you can use QuickBooks Online for your very small or new property management company.
QuickBooks Online offers a number of helpful features:
Automatic recurring invoicing and sales receipts, which make rent collections simple.
Integrated merchant services options, which let you put payment links right on your invoices.
Class tracking, so you can easily produce profit and loss statements for each property in your portfolio.
An extensive suite of add-on applications, which you can use to streamline your vendor payments, payroll and any other accounting functions you need.
What QuickBooks Online lacks, though, is a comprehensive administrative module for your property management company. Unlike software created specifically for property managers, QuickBooks Online does not have lease management, maintenance or marketing functions.
Another consideration is price — QuickBooks Online has subscription plans ranging from $25 to $150 per month. Most property management companies will need the QuickBooks Online Plus plan, which is currently $70 per month, and larger companies will require QuickBooks Online Advanced, which costs $150 per month.
Keep in mind you will need a separate subscription for each LLC you manage, so this low-cost solution might not be very low-cost for long.
Therefore, when you take into consideration the lack of administrative functionality in QuickBooks, you might find another option better suited to your needs.
2. QuickBooks Desktop Pro
Best for growing businesses that want to use QuickBooks.
Another option for businesses that are partial to QuickBooks products is to use QuickBooks Pro (also known as QuickBooks Desktop). Unless you choose a remote hosting option, however, you will lose the cloud-based access QuickBooks Online users enjoy.
However, what you gain with QuickBooks Pro is more advanced reporting and the ability to manage multiple LLCs with one purchase. Unlike QuickBooks Online, QuickBooks Desktop lets you set up separate companies without purchasing multiple software licenses.
In terms of pricing, QuickBooks Pro costs $299.95. This one-time payment allows for up to three users and multiple LLC management. You will need to upgrade your software every three years, but your overall investment will still be considerably lower with QuickBooks Desktop vs. QuickBooks Online.
Additionally, a new option available is QuickBooks Pro Plus.
This is also a desktop solution, but it’s subscription-based and includes additional features like unlimited support and automatic data backup. Your first year’s subscription will cost $199.95, going up to $299.95 in year two and beyond. Plus, additional users are $250 per year.
Best standalone tool with QuickBooks Online integration.
If you want all the features of a property management system while maintaining your accounting in QuickBooks Online, then consider Properbooks.
Although you can use it as a standalone property management tool, Properbooks works best when integrated with QuickBooks Online to streamline your property management and your accounting tasks.
Properbooks doesn’t have all the features of some of the other property management solutions on our list, but it covers most of the bases, including:
Tenant contact information.
Properbooks’ affordable $25 monthly subscription cost allows five users to access the system, allowing your team to do their work without having full access to your accounting information.
To seamlessly integrate Properbooks with QuickBooks Online, you can visit the QuickBooks app store.
Best all-in-one software for smaller property management companies.
Buildium is a popular property management accounting software option among bookkeepers who specialize in the property management niche. Not only is it a complete accounting solution, but Buildium also offers a robust property management platform, including:
Online portals for your residents and owners.
Free marketing websites for your business.
eLeases (an additional charge applies at the Essential subscription level).
In addition, Buildium is one of the most affordable all-in-one solutions available. Pricing starts at $50 per month for its Essential plan — which allows you to manage up to 150 units. For its Growth plan, pricing starts at $160 per month and allows you to manage up to 5,000 units.
Finally, the Premium plan starts at $460 per month and can also manage up to $5,000 units. The ultimate price you’ll pay with any plan will depend on how many units you manage.
best accounting software for commercial real estate
Many startup and established real estate businesses make the mistake of trying to function without knowing the real value of their businesses. Accounting is a critical component of a successful real estate business. Instead of spending tons of capital on accounting firms, real estate businesses can opt to use one of the many accounting software for real estate businesses that are available on the market. Brokerage firms can also take advantage of real estate brokerage accounting software for their businesses. Here, we sample 5 best accounting software for real estate businesses.
5 Best Real Estate Accounting Software
FreshBooks is an intuitive program that can be incorporated into real estate, offering tools for real estate income generation, customer lists, property tracking, and more. The interface makes it easy to manage expenses, revenue streams, banking, cash flows, invoices, taxes and receipts. Each of these can be applied in all real estate categories. Add a number of custom fields in FreshBooks for property tracking and easily manage, sort, and store critical information such as floor plans, property descriptions, lease dates, due dates, current rent, appraisal value, and maintenance. FreshBooks can be easily complemented by other accounting and budgeting software to sync with credit cards, investments and bank accounts among others.
Realtyzam is a cloud-based real estate accounting software that is popularly used to manage receipts and track expenses, which helps provide an indication of a business’ financial health. It enables real estate agents to track income and keep tabs of marketing and listing fees, commissions, and broker fees.
It is also quite useful for generating reconciliation and tax reports in order to file tax returns at the end of the financial year. As well, Real Estate agents use it to track conversion rates on a monthly or annual basis and also to provide insights into productive sales leads over a given period.
Realtyzam is available for both desktop and mobile-based platforms, including Android and iOS devices on a flat monthly subscription fee.
Xero is another cloud-based real estate accounting software that allows you to manage your company’s accounts remotely. This application allows users to keep track of invoices, expenses, and tax inputs and outputs seamlessly from a PC or mobile app. It also integrates with your bank accounts, enabling you to reconcile expenses. Xero also comes with a neat payroll processing feature to help automate the monthly payroll.
Cloud-based accounting applications such as Xero enable users to synchronize data with accountants and bookkeepers, which enable businesses to run smoothly. Xero is especially useful for portfolio management where most functions are automated and easily managed remotely.
Additionally, like Back Office, Xero comes with QuickBooks integration that lets you sync data between Xero and QuickBooks.
A property management solution based on the web, Buildium allows property and residential managers to effectively control their business in virtually every critical aspect. The accounting software for real estate investors offers streamlined management of property rent through important features from lease and tenant tracking, to complete ledger general accounting, on demand reports, late fee notifications and automated rent reminders. Accounting features of Buildium include secure bank account management, rent acceptance, creation of critical reporting, monitoring and reporting on property and business expenses, accepting and making online payments for vendors, and association fees and rent.
5. Sage 300 Construction and Real Estate
This is a construction and real estate accounting software and management solution that brings together different aspects of real estate management on a single platform. Sage 300 Construction and Real Estate incorporates Sage’s experience in accounting software, providing users with unparalleled accounting functionality.
Real estate agents can use Sage 300 to manage accounts payable, accounts receivable, ledger accounts, and payroll processing. While Sage 300 can store large amounts of data, it’s not the easiest application to use. Sage 300 also suffers from scarce updates, which makes the whole user experience feel a bit outdated.
Cover the Shortage of Real Estate Accounting Software
Real estate accounting software perfectly helps manage accounting and finances of your real estate investment. However, there’re still lots of things you can’t do with accounting tools. Extracting data for easier use and collaboration can be a hassle for instance. PDFelement is the complete solution to use alongside real estate accounting software. It helps extract data for accounting and financial management purposes on mobile or desktop, protects documents with passwords, creates fillable forms, converts files into PDF, redacts sensitive information, and has automatic form field recognition.
Standardize documents format by converting to PDF
Even with real estate accounting software, it’s hard to efficiently analyze data and reports without standardized documentation. PDFelement is easy to use for real estate and offers unique features, such as PDF editing, organizing, converting, and creation. You can effectively standardize documents through desktops and mobile devices. PDFelement allows for the sharing of PDF documents without losing formatting and layout of documents. It also ensures that diverse users are able to work on the same documents across both Mac and Windows.
Create fillable forms and fill form
It is often difficult to use real estate accounting software to create and fill forms. Manual printing takes up a lot of time for the organization, as forms have to be filled and sent by hand. PDFelement can help when used together with real estate accounting software to reduce the time you need to work on creating and filling accounting workflow forms. PDFelement lets your effortlessly create forms from scratch or fill existing forms using the “Form” tab.
Convert scanned files into editable PDFs (OCR)
Paper-based accounting can be tedious and time-consuming. PDFelement allows you to make your real estate accounting software processes paperless through advanced Optical Character Recognition (OCR). OCR ensures top-notch editable digital files are created quickly and easily from paper files. Many real estate accounting tools lack effective methods of efficiently converting thousands of documents into editable and usable forms. But PDFelement can. The OCR feature in PDFelement detects characters exactly as they appear, and converts them into editable and usable digital files that are also searchable. This ensures you don’t waste hundreds of hours managing files and converting documents.
When using commercial real estate accounting software you are often dealing with a lot of files and data. Extracting and exporting these files manually is a time consuming process. But a unique solution exists in PDFelement. Rather than wasting time copying and analyzing data on paper and manually inputting the files and converting them into digital systems, PDFelements offers a one-click solution. It takes a few minutes and saves lots of time while ensuring you don’t make errors on your important digital files. The extracted data is immediately ready for analysis, editing, and using as you deem fit in your financial reports.
Protect files with password
Financial documents require sensitive handling to avoid exposing the wrong information to the wrong individuals. Real estate accounting software allows you to access a lot of files and data, but without protection of your information you’re constantly at risk. PDFelement offers a unique solution to add passwords, encrypt files, or redact data to protect sensitive information. You can manage diverse passwords simultaneously using PDFelement “Protect” tab. In the process, you’ll gain full control of your accounting files and can limit those who can view and open sensitive files in a unique way no real estate accounting software can provide.
How do I prepare a real estate accountant?
Having been around the properties and dealing with a host of clients each day, it could undoubtedly be excruciating to look after the accounts, too. Well, the primary reason for this could be the lack of support or knowledge about accounting and accounting cycles.
The real estate sector has evolved tremendously over the years and involves a lot of transactions, complying with a lot of state regulations, and so on. Amidst all this, an integral and essential part of the industry is accounting which every property manager must keep a record of. If you are a property dealer who finds it intimidating to catch hold of the accounting part, then this post is surely going to help you.
We have brought together the most crucial aspects of real estate accounting in this post, which are:
Who Uses Real Estate Accounting?
Real estate accounting is used for the purpose of property management which is a process that involves enormous sums of money. To record and track the transactions of these sums is referred to as real estate accounting.
If you are an individual who finds themselves in any of the following categories, then you must be familiar with real estate accounting:
Why is Real Estate Accounting Important?
Understanding how real estate accounting works will help you run your business more effectively, and understanding how to manage your books will allow you to monitor your progress. This enables you to see if you are making a profit and which properties are performing well. Additionally, it will enable you to compare your financial performance over time, estimate your cash flow, calculate your tax return, and make timely bill payments.
The task of managing bookkeeping can sometimes seem overwhelming. Accounting for real estate is crucial to maintaining financial statements and identifying growth potential.
Real Estate Accounting: Best Practices
The following are some real estate accounting best practices for beginners:
Use cloud-based accounting software
The best decision an entrepreneur can make is to use cloud-based accounting software since it allows them to access financial information anytime, anywhere. It also allows them to share data with their team. Deskera, for instance, provides an entirely fresh perspective on accounting. It’s a platform that not only lets you have all your accounting elements in one place but also enables you to keep a tab on each of them. You can assess and analyze everything you need to in real-time.
Digitize your business
There needs to be some form of evidence for each of your transactions in the ledger. This can be accomplished with the use of technology. You can also take clues from the latest digital trends in accounting and finance that help you. Mobile applications and portable scanners can go a long way to helping you instantaneously scan receipts. Digital receipts are a great convenience, especially if you have lost receipts or need them for financial audit purposes.
Outsourcing your accounting process
Hiring professionals like certified CPAs or accountants is certainly a good practice, especially when you are not completely aware of the accounting process. This would not only ensure an accurate recording and reporting but also take away a lot of your burden. This way, you could lay more emphasis on your core business activities rather than be worried about accounting.
Real Estate Accounting Regulations
Private companies must follow specified accounting standards mandated by the government. This accounting regulation is intended to achieve the following:
Accounting standards are set by the nonprofit organization, Financial Accounting Standards Board or FASB. It is FASB’s official role to set accounting standards in the United States; therefore, FASB standards are viewed as the authority in this concern. All the standards set by the organization are accessible on the FASB website.
Using incorrect or dishonest accounting practices can land you in hot water. There could be honest errors that can be amended. However, the ones that are done deliberately to mislead can lead to legal prosecution. Therefore, it is of the utmost importance to be extremely cautious while treading the accounting path.
There are a lot of regulations in American accounting. While these regulations must be complied with, for new or small businesses, the task could be an uphill one. To avoid getting in trouble, we would recommend hiring an expert professional who will be able to handle it all for you.
Bookkeeping and the 5 Accounting Elements
Bookkeeping is a term with which most people are well acquainted. However, it is almost always used interchangeably with accounting. It is important to note that the two differ in more ways than one. This section aims to clear up the differences between the two as well as showcase the characteristics of each of them.
Bookkeeping refers to the process of recording all the financial transactions taking place in your company. You must maintain and ensure accuracy while reporting your income as it would be scrutinized at the time of IRS audits.
This leads us to learn about double-entry bookkeeping:
Apart from making it easy to understand accounting, this system gives us a very useful equation to further ease up the process:
This equation states that the sum of your liabilities and equity must produce the total number of assets you have. It simply helps us to reduce the number of errors in the process.
We shall learn more about these terms in the next section.
5 Accounting Elements
In the accounting landscape, there are five elements identified as the basics of accounting. These are as follows:
An asset is a term used for the possessions of a company that are used for the benefit of the company. Assets can be further categorized as fixed and current assets. In real estate, properties can be termed principal assets.
Equity is the difference between assets and liabilities that determines the value of the company. It is given by the following equation:
In the case where the owners have different amounts of equity within a company, then there must be a separate accounting process for each one.
It is a term that refers to the money that the company owes, and therefore, it can be said to be the opposite of the asset. Also, like assets, the liabilities are also categorized into two types: Fixed liabilities and current liabilities. Fixed liabilities are debts that need to be paid over a period of time. Current liabilities refer to the debts that need to be paid within the span of a year.
Any amount that you pay except for debts is called an expense. Being a real estate brokerage firm, you can say that the salary you pay to your employees is your expense.
You receive income every time you sell a good or service. In real estate, income can come from collecting rents from the tenants.
By reporting and recording these elements, you can get a complete grip of your accounts and finances.
Real Estate Taxes
Emphasizing good accounting practices brings in the advantage of tax savings. As someone in real estate, you must be aware of the various taxes that apply to the field. The real estate tax or the property tax, as it is commonly known, is a tax levied on immovable properties. The properties like land, plots, buildings all come under this class.
The tax amount varies and depends on the size and value of the property. The property tax also varies based on the following factors:
Personal Property Tax
You may have to pay a personal property tax on these items if they generate income for your business. Personal property taxes are taxes imposed on your movable property. The tools, equipment, and vehicles that your business owns, as well as furniture you place in rental homes, might be subject to taxation.
Real Estate Tax-Saving Strategies
If you plan properly, your real estate business could benefit from numerous tax advantages. A solid accounting system is therefore crucial. Let’s review a few important tax-saving strategies.
Your business can save a great deal of money on taxes if it owns rental properties. Rental properties can help you with the following:
A building’s value may decline naturally over time as it wears down. This process is called depreciation. In order to protect your income, you can record property depreciation when you file your taxes. A depreciation calculation can be done using various methods such as the MACRS method, Unit of Production method, Straight-line depreciation.