Accounting Secret: Isolating Properties for More Profits
It is very common for companies to make the mistake of not keeping their properties separate within their business. If you are a business owner with more than one property, you might find this article interesting as it lays out the reasons of separating your properties. One of the main reasons you want to keep your properties separate is to be able to evaluate the success of each of them. While if they were all recorded under the same accounting journal with no distinction, you would not be able to see if one of them is failing and need more attention.
Don’t mix up transactions from different properties
If you own a number of properties through your business, it is important to keep the information –administrative and financial- regarding these properties separate. For a start, distinguishing the different properties you own on separate accounting documents will help you stay organized and avoid you the mistake of misplacing information. Mixing up transactions from different properties will create problems in the future as the information recorded will not be accurate. You might want to consider each property as a different and unique business, this way you will have a clear view of the different transactions performed within each of your property.
Keep track of important deadlines
Furthermore, keeping information regarding your business’ properties in different files helps you keep track of filing requirements or payments with strict deadlines. As recently seen in one of our previous article, many businesses end up falling behind because of poor record keeping. Having different record documents for each of your properties will allow you to stay organized and not to miss an important deadline or payment. Being disorganized, you and your company could face important financial and legal penalties. When your properties records are organized separately, it is easy to make payments or file taxes on time!
Have an accurate view of each of your properties
Another positive aspect of keeping your properties separate is to have an accurate view of each one separately. It is the best way for you to determine whether or not one of your businesses is doing well. If there are no distinctions between them, you won’t be able to see the potential difficulties encountered and take the necessary measures. Staying organized will help your business save money and even make more.
Keep your different expenses separately
In addition to keeping each of your properties separately they should all have their own expense account. This will help you monitor how much you are spending on the individual properties over a long period of time. Keeping each property’s transaction receipt in separate files allows you to avoid mixing up information and making mistakes. In the long run, such data is going to help in quick decision making.
Separate the different mortgages and insurance accounts that you have
Finally, you should separate the insurance costs and the mortgage of each property. The amount of money you spend on insurance and benefits for each property should be recorded in different accounts. They should not all fall under the same account since they belong to different properties and have different features to them. In most cases, company’s owners have taken multiple mortgages for the different properties they own. The information pertaining to these different mortgages should also be recorded separately. This basically enhances organization and quick retrieval of information. Having separate files will also make it easier in case of legal matter.
It is important to know how you can record the different transactions and information pertaining to different properties in different files. This way, creating reports will become easier and you will have a clear picture of the financial health of each of your properties. You may want to involve the right professionals to help you in this area as owning different properties can easily become overwhelming.