Tax season is right around the corner and if you’re like most investors or landlords you may be someone who has gotten ready for this important time of year at the last minute.
Thankfully, you can get ready for the 2019 tax season by following these tips:
Tips For Getting Ready For Tax Season
Simplify the process for paying bills
Accounts payable is so much easier when all of your notes, documents, vendor information, bills and payment info is organized and easily accessible.
Manage bank reconciliations
Picture all of your bank information, consolidated: bank account, deposits and reconciliations and much more. This organization greatly simplifies the year-end close as you get your books ready for tax time.
Enable online payments
Centralized payments made to your property owners and vendors makes a huge difference for your peace of mind.
Manage your budget
From property level to business wide, a portfolio of income and expenses can make you secure in your ability to see the big picture.
Manage fees with accuracy
Fee management and accounting tools are designed to make that part of your business a piece of cake.
Generate financial reports
In one click, you could be viewing your business from dozens of customizable, easy-to-read reports. From cash flow to profit and loss, your business’ financial health is at your fingertips.
Sync with QuickBooks®
Find relief in knowing that the right property accounting software can sync with your third party accounting software such as QuickBooks®, Microsoft Dynamics and others. These platforms streamline the tax preparation work for your accountant, saving you time and money.
More Tips For Being Prepared For Tax Season
Some additional things that you can do to be prepared for filing your taxes include the following:
#1. Verify Information for 1099s
If you need to send out 1099s to property owners or vendors, it’s a good idea to make certain that you have their correct names, tax IDs, and addresses on file well in advance. If you’re missing any W-9s, you’ll need to request them from anybody who gets a 1099. (You’ll also need this tax information if you want to take deductions on your own taxes.) Seasoned property managers learn that it’s usually best to simply require a W-9 before making that first payment, but this doesn’t always happen in the real world.
Some property managers aren’t sure which owners or vendors need to receive a 1099. If you’re not sure who you need to send out a 1099 to, you might consult with a tax professional or check the latest IRS information on that topic.
Tech Tip: Technology is a huge time-saver when it comes to keeping on top of your 1099s. With the right property management software, you can send 1099s directly to owners and vendors electronically. Or, if you need to print one, you can do so without needing to purchase blank 1099 forms (a major bonus). You can also download FIRE files to e-File large batches of 1099s to the IRS.
#2. Dig for Tax Deductions
Some property owners and managers may overlook common deductions. For example, insurance that gets purchased for the property management business should be tax deductible. Most property managers know about deducting landlord insurance. However, if an umbrella insurance policy was purchased to provide extra liability insurance for the property owner, it should also be considered. Examples of other commonly overlooked deductions include mileage for vehicles and software or computer expenses.
If you’re uncertain what you can deduct, hiring a tax professional might end up saving money in the long run. Also, make sure you keep track of all of the money that you spend on maintenance, business operations, and repairs. Some expenses may seem too small to bother with, but they can add up over time and with multiple properties.
#3. Stay Updated on Tax Law Changes
This one seems straightforward, but it’s difficult to prepare for tax season if you don’t know the current rules. Changes to federal and state tax codes could even impact some business decisions, so it’s wise to plan ahead.
Avoid any surprises by proactively keeping updated on changes to the rules. One very good resource for tax news that’s oriented towards property managers is the National Apartment Association. Simply visit NAAHQ.org, and search for “taxes”.
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