As normal for any business, the renting properties’ business has to transact with correct and up to date financial records. Every April, the new financial year begins and all business accounts have to be in order for the taxman.Finances are the ‘live blood’ of renting and so proper landlord accounting methods should be used.There are two landlord accounting strategies appropriate for the business that are recommended, they are;

1. The first one is doing the financial record keeping him or herself. This is possible but not advisable unless the landlord is a certified and experienced accountant.

2. The other method is to use a professional and certified accountant. The accountants can be either independent or working for one of the large firms, the former tend to be cheaper and more accessible to a small business man. However if a landlord’s accounting needs are larger, it may be worth hiring one of the big accounting firms who can handle a greater workload in a shorter time.

Landlord accounting process should be driven toward forming and producing a list of the expenses and the gains from the business. The list should be kept up to date with the current data presented in the best manner possible. The two documents of importance in the landlord accounting procedure are the balance sheet and the financial statement.

Importance of up to date and correct financial record

The balance sheet and financial statement form the core records as they show the financial state of the business. The balance sheet shows its financial worth, i.e. the cash value equivalent of the business in net terms.

The financial statement outlines the profitability to the landlord, i.e. how much actual money he makes. If these figures don’t add up, as with any business concern, the landlord will have to act fast. The financial statement includes expenses and income, if income is more than the expenses, then all is well.

The balance sheet, also known as statement of affairs, is formed by the landlord‘saccounting team and is the cash equivalent of the business. This shows the various assets of the houses that are rented out to tenants and their cost, for example water rates and general repairs.

The value in this case is the cost of the asset in the market. This value is then subjected to the depreciation rate to give the current value of the part. A balance sheet is also important as it can be used as collateral by a bank in case of a loan being required.