It's getting pretty late in the year as far as tax season goes. If you're actively searching out tax articles concerning your property management business, you most likely fall into one of the following categories: You’ve either put it off so long you're in a panic, or you're in planning mode for next year. If you're a procrastinator, this writer feels your pain. For property managers who drag their feet until the last minute, here are some things to be thinking about right now.
Vendor and Owner 1099s
If you haven't mailed your 1099s out yet, do it today! The deadline has passed at this point and if you didn't file for an extension and you cannot show reasonable cause for missing the deadline to the IRS, you may be facing penalties.
You have until March 31st to file them with the IRS and if you have more than 250 1099’s you must file them electronically. Not meeting this deadline could be costly for your business.
Close Out Your Books
If you're still looking at 2016 when you open your financial software, it's time to move on to 2017! Review your paperwork relating to vendors, property owners and tenants. Reconcile your bank statements against the data in your financial software. Make sure that nothing pressing has been overlooked, including for example receipts, payments, papers signed, and looming deadlines.
Now that your information is all buttoned up, make sure your owners have their 2016 statements showing itemized income and expenses for the year. After all, they need to file their taxes too.
If you don't fall into the procrastinator category, you should be looking to the future.
If you're not already organized and ready for 2017, you should get on that! Things like keeping receipts and tracking mileage can be a big help when it comes to making next year's tax season a friendlier time. There are several apps for your phone that can make keeping track of mileage and receipts while on the road a snap. Also, don't forget, if you work from home you may qualify for certain related deductions.
Work on your 2017 budget. An annual operating budget is critical to success and puts a plan in place allowing you to measure progress throughout the year.
If you use a property management software, make sure it integrates with your accounting software or, like Propertyware, it meets your accounting software needs out of the box. This will make life so much easier, making it less likely that financial data slips through the cracks.
Budget for what you can expect. Ongoing costs are easy, but for those unexpected things now is the time to discuss with your owners how to set aside money to address future unforeseen problems.
Lastly, you can take this time to evaluate your vendor relationships. Ensure that, like Propertyware, your property management software is able to generate a report showing how many work orders were assigned and how much money was paid to each vendor. Using this information should help you to negotiate fees. If you've been working together for a while, they may be willing to give you a better rate. It never hurts to ask!
Find a Qualified CPA or a Bookkeeper
If you find that you're overly stressed when it comes to budgeting and finances, you might consider hiring a professional. As the owner, you likely are emotionally invested in the success of your business, which can (at times) cause you to make financial decisions guided by emotion rather than pure accounting. Bringing in a detached third party such as a CPA or bookkeeper can sometimes be the best decision a business owner can make.
Take the stress out of tax season. Learn how rental property management accounting software can benefit your business.
**Please note that this blog article, and its contents, is being provided for informational purposes only. It does not constitute legal, tax or accounting advice and should not be used or relied upon as a substitute for such advice. You should consult with a qualified professional for any legal, tax or accounting-related questions you have relating to the subject matter.**