If you’re the owner of vacation rental property you probably already know how much paperwork can be generated. You don’t want to lose track of a single expense or receipt because at tax time they’re the difference between owing a lot and not.
With the tax season behind us, it’s a great time to evaluate how you track your rental business expenses and try to streamline and improve them for next year. There are several technological solutions available that can easily help you keep track of all your vacation rental expenses without any hassle. There are also several tricks of the trade that you can implement now.
Don’t complicate it. Keeping track of your expenses doesn’t have to be complicated. Many property owners advocate setting aside a dedicated period of time each week to update your records. Find what works for you and set up your own routine.
Use just one credit card. Stick with one credit card and know that every item purchased with this credit card is a vacation rental expense. It’s an easy way to assign purchases to the category they belong in such as cleaning, maintenance and advertising, etc.
Get your head in the cloud. If you’re not using a cloud-based accounting software system such as Quickbooks Online or Xero, consider the benefits of doing so for the next tax year. Because the software is hosted online, you can access it and record your expenses from anywhere. Link your credit card and bank account, too, so that expenses automatically feed into your account, and when you are ready to create expense reports, it’s a simple task.
Keep that paper trail. When possible, jot down relevant notes on the backs of your receipts so that you know exactly which expenses they are related to — meals and entertainment, travel, vehicle and home office expenses are among the main expense categories. If you have a receipt for a meal, write down who was present and the purpose of the meeting. This kind of paper trail is important, as it will help support your case in the event of a tax audit.
Receipts everywhere. Do you have an ever growing stack of receipts and bills? Check out a cloud-based app such as HubDoc and make your life easier. Using your phone, take photos of paperwork and forward email invoices right from your inbox. This works well if you are using an accountant or bookkeeper, as they can access your bills and receipts through the cloud as well.
Track your expenses. There are several great programs available for tracking expenses. Mint and Billguard are two examples. Link up your expense card with these apps and all of your purchasing data will be instantly available on your phone and can be accessed from anywhere.
Don’t make things more complicated than they need to be. If you want help with your vacation rental property, give Topsail Realty a call at 800-526-6432. Our singular focus is on protecting your hard earned asset, while maximizing its income and occupancy potential. We offer a turnkey, end to end solution that gives you peace of mind knowing your home is being cared for and marketed by local professionals.