As your real estate investment business grows, you’re going to be faced with a growing need for someone to handle your books. This is important, because real estate investing involves plenty of moving parts and expenses/income you need to meticulously track.
Staying on top of that is at least a part time job, and probably not the highest and best use of your time. While you’re out maintaining properties or looking for fresh investment opportunities, you can have a bookkeeper taking care of receipts, categorizations, expense reporting, etc.
The choice you’ll probably face is between one of these:
Hiring a bookkeeper in-house
OR
Hiring an outsourced accountant
There are pros and cons to each option.
At our firm, we’re passionate about making sure real estate investors are well-equipped and well-informed. Read on for more information on hiring a bookkeeper in-house versus outsourced accounting, and check out our outsourced accounting services.
Let’s start with the pros of hiring an in-house bookkeeper:
An in-house bookkeeper may be a payroll employee or an independent contractor. Either way, they probably work exclusively for you, which gives you a lot of oversight.
On the flip side, there are definitely some cons to hiring an in-house bookkeeper:
It’s important to make a quick distinction here: a bookkeeper isn’t the same as a CPA. While CPAs can sometimes perform some bookkeeping functions, a bookkeeper is really just performing basic record-keeping tasks. They’ll organize and report on your finances, but what they won’t do is interpret them or tell you what they mean. If you’re fundamentally dissatisfied with the service you’ve received from a bookkeeper in the past, it may be because you had the wrong expectations.
To get more clarity on the different services offered by an accounting firm, click here.
This time, let’s start with the cons. The cons of outsourced accounting are the following:
Even when you hire an outsourced accountant, it won’t be 100% hands off. You will still need to coordinate efforts, providing information when requested. The good news is this coordination can probably be done by an office manager or assistant, so you can just see the reporting and only be involved if you need to be.
Outsourced accounting is a popular choice because there truly are many pros:
Perhaps one of the highest priority benefits of outsourced accounting is that you can work with industry specialists. For instance, we work exclusively with real estate investors, which means we know this field in and out. We can easily offer up recommendations for best practices based on comparable scenarios and what we understand is happening in the market. This is hugely valuable if you want to take advantage of every opportunity available to you, and make the best-informed strategic decisions to grow your business.
So, whether you move towards an in-house bookkeeper or outsourced accounting services, how do you know you’re ready to make that move?
You’re ready to hire a bookkeeper or outsourced accountant if you fall into one of two categories:
All serious-minded real estate investors will outgrow DIY bookkeeping. As soon as you have two or three properties, you’re ready to advance your own role and move solidly into strategic leadership tasks. As soon as your business is profitable enough to support an employee, outsourced accounting for real estate is the way to go.
Outsourced accounting services can be game-changing for your real estate investment business. If you’re willing to give up a little control, and want to get the most cost-effective option, an outsourced accounting team is the right choice.
These accountants will work hard to manage all of your rental income and associated expenses. This gives a clear line of sight into the status of your profits and losses every month, and ensures you are operating in compliance with any and every regulatory framework.
For more info on getting outsourced accounting for your real estate investment business, contact us today.