Whether you have one rental property or ten, managing the accounting books can be daunting. You don't want to miss legitimate deductions or either under- or over-report income. Here are the basics of what you need to know in order to successfully keep the books for your rentals.

Income

Obviously, the lion's share of income that a landlord receives is in the form of rent paid. Tracking rent payments isn't very hard and should be done separately for each rental unit, at least on a separate notebook page. Be sure to also track any reimbursements received by tenants, insurance claims and security deposits paid. Refundable security deposits may need to be accounted for differently when they are returned to a departing renter. 

Expenses

Expenses for rental properties can be varied, so be diligent about keeping copies. Typical rental expenses will include such things as:

• Mortgage payments and insurance
• Real estate taxes
• Repairs (materials and labor)
• Improvements
• Mileage
• Homeowners association fees
• Insurance payments and claims
• Advertising
• Legal Fees
• Permits
• Yard work
• Utilities
• Management fees

Keep a copy of any and all expenses related to each property, even if you're unsure if it will be deductible. Your accountant will be able to help you go through your documents to determine what can be claimed on taxes and used for depreciation purposes. 

Organization

 As mentioned previously, you'll need to track income and expenses for rentals separately. For most landlords, all that's necessary is basic use of a simple accounting program like Quickbooks and/or a separate folder for each property's receipts and other hard copy paperwork. Issue receipts to tenants (and keep a copy) for cash rent payments to ensure that you have all income accounted for. Keep copies of rent paid electronically or by check. Work with a certified public accountant from a business like Carmines Robbins & Company PLC to make sure you're documenting and organizing things properly.

Also, purchase an inexpensive mileage log book at any office supply store. Keep track of the odometer reading on your car at the beginning of each month, then add in all business trips taken (including dates, reason for trips and odometer readings to/from the locations). Mileage can be claimed for business purposes at a rate of 56 cents per mile in 2014. 

Why It's Worth The Effort

Careful planning and thorough retention of your records will help make your time as a landlord more profitable and easier to manage. It will also help tremendously if you ever get audited, which is something that's a little more likely to happen if you claim rental income. And finally, it'll make your accountant much happier when it comes time to prepare your taxes.

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