Financial reporting is crucial for your Kelowna investment property because the Canada Revenue Agency will be interested in what you earned and what you lost on that real estate in a given year. It’s also important to you, because you’ll use financial reports and income statements to make smart investment decisions moving forward.
Good reporting leads to better ROI.
Organizing Kelowna Rental Property Income and Expenses
At its most basic, financial reporting allows you to track your income and expenses. You need to know how much you earned on your rental property and how much you spent maintaining it. This has to be clear, accurate, and transparent.
Even if you work with an accountant or a tax attorney, you’ll need to share with them where your rent is coming from and how you’re paying for repairs. This will create the type of financial reporting that allows you to clearly see what you’re earning and what you’re spending on a monthly, quarterly, and annual basis.
Financial Reporting Leads to Budgeting
Budgeting is important for things like maintenance, vacancy, and marketing. You’ll need to budget for every turnover between tenants. You want to set aside a maintenance reserve, if you can.
When you’re looking at accurate financial reports, it’s easier to budget for these things. You’ll know what your fixed expenses look like, such as mortgage payments, insurance, landscaping, pest control, and other ongoing services. By looking at your property’s financial history, you’ll know what to expect to pay for those variable costs. Reporting lets you forecast when you’ll have to make big expenditures. You can plan for your new roof, for example, and estimate the lifespan of your air conditioning unit.
Invest in Innovative Accounting Technology
Because your financial reporting is so important, you need to make sure it’s easy to access and integrated with your day-to-day management functions. Give up the paper ledger and use some of the software systems and online apps that are available. You can access the best accounting technology when you work with a Kelowna property manager. But, there are platforms designed for independent landlords as well, even if you only own one or two properties.
When you keep everything digital, you can access it from anywhere in the world, and that can be extremely helpful when emergencies pop up. All of your information needs to be accessible, clear, and transparent.
Financial Reports Manage Risk with Kelowna Investment Property
Take an objective look at your financial tracking at least once a year.
With good reporting, you can audit yourself or provide the right information to a third-party auditor. Make sure you’re following all the legal requirements for how money is collected, spent, and returned. Audit your security deposit process and your entire bookkeeping process. This will provide credibility to all your financial statements. It also gives you a chance to examine and perhaps improve your internal controls and procedures.
There’s less risk that you’ll be audited or questioned when your financial reporting is clear and transparent.
When financial reporting becomes difficult or confusing, it’s time to work with a Kelowna property management partner that has the systems in place to ensure all your income, expenses, and financial details are easily accessible and accurate. Contact us at Vantage West Property Management if you’d like to hear more about how we can help.