Landlords who earn rental income through buy to let properties have always faced problems with respect to maintenance of books of accounts. Some of the most common problems include differentiation of personal income against income from buy to let properties, available tax deductions, management of tax return, etc. Here are 5 bookkeeping tips for buy for let landlords that will help them organize their accounts better:
1 – Update your accounts periodically
The rule of thumb is to ensure that accounts are maintained at regular intervals. Landlords should consider updating their accounts same day of every month so that events like rent earned, expense incurred, adjustment for deductions, etc., are handled monthly. Piling all data for the last month may result into factual errors and confusion.
2 – Manage your expenses receipts
A common issue that is faced by every accountant is availability of expense receipts. Keeping a track of all receipts is difficult, however, if managed on a monthly basis the scope of error is much less. Rather, consider keeping a box or an online app where you can drop or scan of your expenses receipt monthly and then handover the report to your accountant for recording or reviewing them into the accounting books.
3 – Keep your documents organized
Maintaining organized files helps you and your accountant to compute your tax liability correctly. Ensure there are numerous folders that take care of bank statements, income and expenses, capital gains and previous years tax filing receipts from HMRC. These files will make your books of accounts organized and ensure minimum error.
4 – Differentiate between personal income and rent income
As a landlord it may be confusing for a person to understand the difference between personal income and rental income. If required, speak to your accountant and seek his advice in respect of accepting money in your bank account. Make a clear list of what payments can be accepted on your personal account and what will go to your business account (rent account in this case). If this is not maintained, you end up paying higher taxes if your cumulative income falls under higher tax bracket.
5 – Ask your accountant
The best tips for any buy for let landlords is to avail assistance from their respective accountant. Any issue that creates a doubt in your mind should be immediately shared with the accountant. This will ensure that your accounts are maintained correctly and scope of errors are minimized to the lowest level. Additionally, also keep a track of the concerned deadlines in terms of filing returns.
As part of accounting for Landlord services, we provide portfolio accounting report to see your profit & loss and financial statement segregated per property portfolio. We also provide a premium bookkeeping app for you to use anywhere either via mobile or web browser to keep of record of all your receipts and expenses transactions with paperless account.
Have questions? We’ll be glad to answer the same for you. Feel free to get in touch with us at 03301331114 or drop a mail at: [email protected]