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My One Big “Pet Peeve” About 1099’s

My One Big “Pet Peeve” About 1099’s

My one biggest “pet peeve” about doing 1099’s doesn’t even involve the IRS!  Can you guess who this post is going to be about?  Yes, that’s right … it’s going to be about YOU … the business owner (but I promise to take it easy on you and make this more of a “tips for you” type post!)

Most seasoned business owners know that you have to issue 1099’s at the beginning of each year for amounts paid under certain circumstances for the previous year.  This includes, but is not limited to, subcontractors, attorneys, vendors, etc.  If you need a complete refresher course on 1099’s, please visit the IRS’s website for full information at this link.

In order to properly obtain the social security number or tax identification number for the person or company you need to issue a 1099 to, you should have them complete a W-9 form.  You can download one here, just make sure it is the most current form.  Sounds pretty simple, right?

So, here is my “pet peeve” part to all of this:  those who wait until it’s time to produce 1099’s to realize they don’t have a tax identification number or social security number for their vendors.  This leaves you (or your bookkeeper or accountant) scrambling around to obtain the proper information from your vendors in order to complete the 1099’s and have them provided to the vendor and filed with the IRS by the deadlines.

The simplest way to avoid this hassle and stress (for you AND your bookkeeper/accountant) is to get into the habit of having your vendor fill out and return the W-9 to you BEFORE you even issue a check.  In this way, you will always have the proper documentation and information necessary, and this will make 1099 processing a breeze for you.  And trust me, if your bookkeeper/accountant files your 1099’s for you … this is one habit they will love you for!

 

Technology to Help You Go Paperless

Technology to Help You Go Paperless

By taking advantage of the available technology today, making the transition to a paperless office has become fairly simple. Today’s post will cover how cloud-based software and office equipment can help you to be well on your way.
Cloud-Based Real Estate and Property Management Software

The use of a cloud-based real estate and property management software is one of the most important components of your paperless office. The ideal software should include both the bookkeeping and accounting solutions in one complete package. Your chosen technology should provide easy reconciliation of bank statements and a portal to accept online payments from your customers. It should allow you the ability to generate and email letters, owners statements and reports, and work orders. It should have a portal to accept and schedule tenant repair and maintenance requests, as well as ways for prospective tenants to submit applications and other required information. Lastly, your chosen technology should cloud-based access to records and contacts as well as safe and secure storage of documents and information.

Scanners and Electronic Filing

Document scanning is the quickest and easiest way to reduce the amount of paper in your office and safely store things digitally. There are several scanners available for paperless management by reliable brands such as HP, Canon and Fujitsu. Price does play a factor in your decision on which machine you would like to purchase. Prioritize the features that are valuable to your office, and you’re sure to find several great models on the market. Some standard scanner features include duplex imaging and a USB connection. The speed of the scanner is also important, along with having an auto-document feeder, business card scanning, and a good software package so that it is easy to use. You will also need to decide if you need a scanner with network capabilities.

Another very important aspect of setting up a paperless office is the development and implementation of a well-designed filing system. What you put into the system is what you will receive from it, so its very important to do advanced planning in this area. You will need to identify what types of documents will be electronically stored. You will also need to determine folder naming requirements .. something that is simple and easy to remember. Determine the structure for your document folders, i.e. whether or not you will need subfolders crestor drug. Another consideration is who will need access to your folders, and who will be responsible for maintaining your folders.

These are just a couple of implementations you could make in your office to assist you in achieving your paperless office. There may be others that come to mind when you begin to plan your transition.

My next, and final, post in this series will discuss electronic payments.  You definitely don’t want to miss it!  Subscribe below to stay on top of the information.

Some information compiled by and obtained from www.appfolio.com.

Your Opportunities for a Paperless Office

Your Opportunities for a Paperless Office

Opportunities to achieve a paperless office are endless and just take a little imagination.  Below you will find a list of areas you can go paperless in your office.  After you read through the list, prioritize your paperless opportunities to help you understand which areas to focus on first.
Communications

The opportunities for paperless communication exists with owners, purchasers, sellers, tenants and vendors (just to name a few). Instead of mailing your correspondence to your contacts, use email.  The use of email for your correspondence will save you money on postage, paper and time.

Leases, Rental Applications and Purchase Contracts

Move the use of leases, applications, contracts and agreements to the use of online documents.  All of these documents can be completed and stored online for access wherever you may be. Your office will be benefited by saving time, elimination of paper files, and better tracking of documents.

Distribution of Payments to Vendors and Owners

Stop writing paper checks and make your bill payments and owners distributions online using ACH.  You can also use your business credit card to make payments if your vendors accept them. Utilizing online payment systems for vendors and owners allows you to save time, save paper, and pay your bills faster.

Collection of Commissions and Rent Payments Online

Offer opportunities of cloud-based payment solutions to your customers. Most bookkeeping and accounting software have the ability to allow your customer to pay immediately upon receipt of their invoice. Taking advantage of accepting online payments means no checks to process and manage each month, getting paid faster for your services, and no more trips to the bank.

These are just a few of the areas you could incorporate going paperless into your office.  If you think about the things you do every day that involve paper, I’m sure you can come up with many ways to make the transition.

My next post in the “Going Paperless” series will discuss cloud-based software and some types of office equipment you can use to assist in the transition to your paperless office.  Make sure you don’t miss it by subscribing to my blog post updates below!

Some information compiled by and obtained from www.appfolio.com.

 

Why Go Paperless?

Why Go Paperless?

The Benefits of a Paperless Property Management Office

Property managers who run efficient paperless management offices consistently out-perform their competition.

My next few posts are going to be a series about why you should run a paperless real estate and property management office. I will be covering the benefits of a paperless office.  I will also show you where your opportunities are to have a paperless office. And finally, I will do a few posts on cloud-based real estate and property management software, equipment that can help you go paperless and platforms you can incorporate into your system that will help you ditch the paper!

In this post today, we will be going over some of the benefits of having a paperless real estate and property management office.  Here we go!

Cost Savings

The cost savings of having a paperless office are recognized in the areas of reduced office supplies and reduced cost of paper storage. When information, correspondence and legal documents are securely generated and stored online, fewer office supplies are used. Savings are realized on paper, envelopes, paper checks, printer ink, toner cartridges, postage, printed stationery and printed forms just to name a few.  When documents are stored and protected from loss in case of fire, water damage or theft, you’re also reducing your risk level within your office. When you have fewer papers to store and file, that means you have fewer filing cabinets that take up your office space.

Time Savings

The time savings of paperless office are noticed in the areas of reduced staff hours and reduced manual data entry time and errors. Staff hours previously dedicated to filing, storing, retrieving and delivering paperwork, including trips to the bank, are eliminated. Staff can be reduced, redirected or used to manage a greater number of listings, properties and units.

Accounting is typically built into cloud-based real estate and property management software, so no double entry is required. An accounting software solution lowers the risk of bookkeeping errors and creates a more efficient system for tax preparation.

Increased Cash Flow and Greater Efficiency

Online payment of commissions and rents, remote payment processing and online rental applications serve to maximize cash flow and improve earnings. You’re able to work and access these files remotely, and more easily track and manage the business from wherever you are.

Customized reports can be generated for both management and the owners use. Frequent oversight can help predict where efforts need to be made to improve operations and where to reorient staff and resources.

In my next post, I will be giving you some ideas of where your opportunities to go paperless withing your office might be.  Stay tuned!

Some information compiled by and obtained from www.appfolio.com

Trust Accounting for Property Managers – Part Two

Trust Accounting for Property Managers – Part Two

In my last post about trust accounting for property managers, I discussed what trust accounts are and why you should use them. In this post, I am going to give you some tips that well help you stay out of trouble with the Real Estate Commission and some general record-keeping tips for maintaining your trust accounts.

Staying Out of Trouble

A few tips to keep you in the good graces of your Real Estate Commission when it comes to trust accounts:

  • Be sure to deposit all funds in a timely manner.  Your state commission can provide you with their time requirements for depositing trust funds, but a good habit to get into is depositing them within 48 hours of a fully executed lease. If you use software solutions that allow for online payment of rent and other funds, this usually isn’t a problem if you require your tenants to pay their security deposits within 48 hours of their lease being fully executed.
  • If you plan on running rents and property expenses through a trust account, be sure not to include security deposits in this same account.  Maintain a separate account for holding security deposits so they aren’t co-mingled with rent and expense accounts.
  • Make sure you keep all of your trust accounts reconciled on a monthly basis. If there are any discrepancies within the account, resolve them immediately.

Make it a strict company policy to never: pay bills using security deposit funds; co-mingle funds between clients; or use trust account funds to pay your own company expenses.

To make the entire process of trust accounting easier, use a property management software solution that incorporates trust accounting to help keep you in compliance. This software system should offer detailed reporting on trust account balances for each of your properties.

Record Keeping Tips for Trust Accounts

Each state commission has different requirements of the type of record keeping the want to accompany your trust accounts.  Always check with your state-specific Real Estate Commission for their record keeping requirements.

A few of the things you might want to keep in mind when setting up your trust account records are:

  • having a copy of the management agreement for all of your properties/clients
  • having a copy of the lease agreements for all tenants you manage
  • maintain a record of all checkbooks or check registers for each trust account
  • maintain a listing of all checks issued from each trust account, including cancelled and voided checks
  • maintain bank statements for each trust account, as well as your bank reconciliation
  • maintain bank deposit slips for each trust account you keep
  • have copies of all financial and management reports that you provide to the property owners
  • have copies of all invoices that have been paid from your trust accounts
  • keep correspondence concerning security deposit refunds or forfeits from your trust accounts

When it comes to your Real Estate Commission, and especially in the case of an audit, it’s always best to have too much information than not enough.

Trust Accounting for Property Managers – Part One

Trust Accounting for Property Managers – Part One

Trust accounting is a term that all property management and real estate business owners should be very familiar with. My next couple of posts will cover trust accounting:  what trust accounts are, why use them, record keeping and staying out of trouble. These will be great posts to read if you’re not familiar with trust accounting, just need a refresher, or want to make sure you’re properly accounting for trust funds.

What Are Trust Accounts and Why Should You Use Them?

A trust account is usually a separate account set up by a real estate broker or property manager to hold and manage funds that belong to, and are held in trust for, their clients. These clients can be the owners of managed properties and purchasers of real estate for sale. The typical type of funds held in a trust account are security deposits and earnest money. For the purposes of this and the next blog post, I will be concentrating on trust accounting for property managers.

The guidelines and requirements for setting up and maintaining trust accounts can be varied from state to state.  But one thing that all states agree upon is that using a trust account in some form is necessary.

One of the recommended guidelines for handling trust accounts is to establish two accounts.  You will want to hold security deposits in one account, while rents collected and bill payments are processed through the second account.  In some cases, this could be more than the trust account requirements of some states. It is also not very practical for property managers who manage single-family homes.

If you’re curious why you should manage two separate trust accounts, here are just a few of the benefits:

  • You will be able to greatly improve your accuracy in presenting your clients with reconciliation reports at the end of each month, including an accurate accounting of all income and expenses.  Maintaining two separate trust accounts also makes it easier to track any transaction that goes into or out of the account.
  • Property managers can benefit from a thorough understanding of property performance based on the activity maintained for each client. Any disputed transactions can be easily located and verified Visit This Link.
  • Maintaining two separate trust accounts also provides a cleaner audit trail by significantly reducing the opportunity to co-mingle funds.  Co-mingling of funds is a major point of contention in most trust account audits. If you maintain your trust accounts properly from the beginning, it greatly reduces your chance of being audited by your Real Estate Commission.

 

If there is any doubt that you are handling your trust accounts correctly, and even if there isn’t, you should make sure you know your state laws. The first place to look for advice and guidelines is from your state-specific Real Estate Commission. Most Real Estate Commissions will have regulations about how you need to register your trust accounts, how you need to maintain them, and what type of record keeping they feel is best for your trust accounts.

Be sure to read my next post which will cover ways that you can stay out of trouble when it comes to your trust accounts and some suggested record-keeping tips!