Rushabh Shah

Bookkeeping methodology for ABC Real estate The purpose of this document is to make up a standard working methodology for real estate accounting. Organization can adopt accounting policies which is suitable for them Here is suggested bookkeeping methodology for ABC Real estate:           Mortgage account should be set up as a ledger account and not a bank account. Manual journals are not possible in bank account. Recurring invoices should be set up for monthly rental collection. ( Freshbooks can be discarded if it is being used) Payment methods can be set up to facilitate the tenants to pay online. Invoice should be set up from here so that invoices can be printed from Xero. What is Director account and why it is set up in Xero. Budgeting can be set up in Xero. Conversion balance and comparative balances need to be entered. Fixed assets can be set up for depreciation. Can import fixed assets if they are more. Need to check integration with Square up and Arthur online. Can use fathom reports for better reporting on monthly basis. Tracking of Income per property:   Income should be tracked per property based on class tracking for Real Estate. It is advisable that a separate bank account should be maintained per property so that the expenses are easily allocated to that property. Regular updating of books of accounts:   It is advisable to update books of accounts every fortnight so that receivables can be tracked and chased in timely manner. Recurring invoices should be set up so that the invoices are automatically created in accounting system and are matched with the receipts. Common pool of expenses  General expenses which cannot be allocated specifically to a property should be assigned on either of below basis to each of property: o Proportion of rental income o Area occupied per property o Fixed portion of allocation Software for receivables management:   Along with accounting software it is recommended to use any of below software for bookkeeping needs: o Buildium: Buildium is used most in real estate. It is available in cloud environment and it has property management features as well. o Cozy: It is a free to use software which is helpful in receivables tracking. It has integration with Stripe. Below are features that should be looked into while selecting an accounting software: o Ability to manage Apartment, apartments, commercial properties, condominiums, cooperatives, homeowner associations, residential properties etc. o Ability to operate on Cloud environment o Collect rents online o Automatic invoicing o Listing managements o Alerts for software o Expense management o Vacancy Tracking o Maintenance task