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Good bookkeeping is as important for landlords as it is for any other business owner. Without thorough, accurate financial records, you can’t possibly build up a realistic overview of what’s happening in your business. It’s essential for monitoring performance, planning ahead to manage your cash flow, and dealing with the challenges of HMRC.
Ah yes, HMRC. The tax authorities are hot on the heels of landlords who don’t declare rental income, particularly in the wake of Airbnb making it even easier to let out space.
Don’t assume that you’re safely flying under the radar. HMRC can, and do, make checks across the Electoral Roll, Land Registry, letting agents, and rental platforms. It’s just not a risk worth taking.
Keep Everything as Up-to-date as Possible
This is for anyone who has ever sat on the floor surrounded by receipts whilst they try to fill in their tax return. Keep. Things. Current.
Try to maintain your financial records in as close to real-time as possible (we talk about software which can help you do this further in the article!). It’s good for the business, helps you make better decisions based on a more accurate overview, and it’s much better for your stress levels.
Hire a Qualified Accountant and/or Bookkeeper
Financial admin can be complex and mired in rules you might not even realise exist. It’s well worth considering taking on the services of an accountant or a bookkeeper.
As a landlord, you’re often pretty low on spare time, resulting in rushed work or even missing vital deadlines. Handing the task over to someone whose job is dedicated to knowing the rules and regulations can help avoid any blunders.
They’ll have a better idea of what your books should actually look like, so they’re much less likely to make mistakes, or spot potential issues. Beyond keeping your property finances safe, they’ll also have the inside track on all the allowable expenses and tax relief you can get your hands on. Your tax bill will thank you for it!
Keep Your Business and Personal Finances Separate
It’s a requirement for limited companies to have a separate bank account to their owners, but it’s good practice for everyone. Keep your business and personal accounts completely separate and reflect this in your bookkeeping – particularly in terms of making sure that money crossing the barrier is clearly accounted for.
Keeping things apart makes it significantly easier to maintain clear, concise and accurate accounts for your business. If the two are muddled, it’s much harder to identify which transactions relate specifically to business activities versus personal spending and income. Which, in turn, makes reporting and auditing way more stressful than they need to be.
It’s worth noting here that, according to HMRC guidance, you must retain your business records for at least five years following the January 31st tax return deadline for each tax year.
Go Paperless and use Digital Bookkeeping Software
Consider digital bookkeeping software like Landlord Vision your best friend when it comes to business bookkeeping. Double-bonus points if you use a cloud-based system (which basically means you can access it online, rather than from a specific computer or device).
The benefits of a great cloud-based bookkeeping software include:
- Access from anywhere in the world with an internet connection, so you won’t need till you get home to answer questions, or follow up on bills and other admin.
- Eliminating the need for unruly piles of paperwork. That’s good news for your office aesthetic, printing bill, the environment, and finding documents.
- Uploading invoices, receipts and other proof of transactions as you go, so you’re always up to date.
- Good software will integrate with your bank account, PayPal, Stripe and more. You won’t spend as much time typing, and the data is more likely to be correct.
- In general, you’ll be able to automate more of your bookkeeping, so you’ll spend less time on the manual stuff.
All of the above makes year-round financial management and annual return far less ‘taxing’.
Article by The Accountancy Partnership – Providing online accountancy services nationwide for a low, fixed monthly fee.
