Today's topic is the top 5 benefits of ditching the spreadsheet and move to a computerized accounting system. For content purposes, QuickBooks Desktop is the accounting software I am talking about.
I want to make one thing very clear about this post…..it is specifically created for Landlords. There may be some overlap into other industries but this is based on my 6+ years as a bookkeeper for landlords who manage their own units.
Y'all know I like to dive right in.
Excel is a great analytic tool to help compile, sort, calculate, and analyze LOADS of data. It is employed by large and small business owners alike. What makes it such a great tool is that you can do quite a few things with it. Create dashboards, databases, and turn it into a low-cost accounting system. For the former uses, you will hard-pressed to find any as user-friendly and priced so well. For the latter, there are a few reasons why Excel is not the best choice for accounting. Landlords this is especially true for you.
• How many sheets do you have for your Rental Business Workbook?
• How much time does it take to make changes to the data?
• Are you constantly getting and correcting formula errors?
• Are you creating your Profit & Loss Statement from this data yourself? Is your tax preparer? How much is this line item on your overall bill?
• How confident are you in the accuracy of the figures?
I am not trying to pick on you landlords. I know you don't know what you don't know. My goal is to let you know that as you grow your business, some tools you will outgrow. If you have 1-10 units, Excel is a great tool if you do not plan to acquire anymore. For those of you who have more than 10 units, want to acquire more, and are actively doing so this post is for you.
Here are the top 5 reasons to ditch the spreadsheets:
5) Moving to an automated accounting system, like QuickBooks Desktop, makes it much easier to determine how much a tenant owes you and to invoice them for that amount. Reports from your accounting system are harder to refute in court than typed documents, can be generated with a simply mouse-click or 2, and generated at will.
a. Added bonus here is that you can print out a statement showing your tenant's entire rental history with you, including all payments and charges. What a great way to send a good tenant off than with a statement they can give to their new landlord or bank manager as they apply for a loan for their first house.
4) No more double data entry. With QuickBooks Desktop you can input your data and it updates all of the related records, reports, and affected accounts.
3) As I mentioned above, with QuickBooks Desktop there are no mathematical errors like those that can and often do occur with a spreadsheet.
a. Added bonus is you save time not having to correct those errors.
2) Reporting. This is a BIG benefit of moving to an automated accounting software like QuickBooks Desktop for your rental business. More often than not, spreadsheets are not being used to track your liabilities or expenses. This makes generating a Balance Sheet and Profit & Loss Statement difficult. With QuickBooks Desktop, you or your bookkeeper key in your assets, liabilities, revenues, equity, and expenses and generating the reports are as simple as a few mouse clicks.
a. Added bonus here is you can send a few reports to your tax preparer along with any mailed forms you receive and you’ve done all you need for getting your taxes prepared AND lowered your prep fees as I mentioned on my Instagram post.
I want to expand on this particular benefit a little bit more. Some of the more seasoned landlords know this already but for those of you that don't, you need what equates to a simple Profit & Loss Statement for each property you rent out. This information is then entered on the IRS Form Schedule E. As The Landlord's Bookkeeper, I have seen first-hand how using a spreadsheet application to track this for 10+ properties can easily get out of control. When you ditch the spreadsheet and move to accounting software like QuickBooks Desktop, the classes feature helps you generate this information almost seamlessly!
Another report that is TANTAMOUNT to a successful rental business is the RENT ROLL. A rent roll in QuickBooks Desktop is always current and will never need to be continuously created. You will no longer need to create a separate sheet specifically for this.
Next Steps...
As mentioned above, I have worked with landlords for over 6 years who are at every stage of financial organization or disorganization. It's where I feel I can make the most impact and help the most people with my skills and I LOVE to do it. When it comes to managing the financial information for your rental business, QuickBooks Desktop is THE best choice. Spreadsheets are great to get you started and are great tools to help you grow but, once you are past 10 units, it's time to move to software that is robust and designed to show you the information that matters most your business.
QuickBooks Desktop can help you generate all the reports you need to secure private funding, a new loan or refinance a current one, and most importantly capture all of your expenses so that you are getting the most out of your allowable tax deductions which can lower your tax liability.
Make the switch. Schedule a call with us, TODAY! We are here to help you!
