By Danny DeCota
Real estate is a massive industry in the United States. In fact, the total market cap of the real estate industry in Washington alone is more than $1.5 billion. Such a vast industry naturally requires financial experts, as accounting plays a huge and vital role here. Nevertheless, many real estate businesses in Washington fail to understand the importance of real estate accounting and, therefore, incur unanticipated losses.
So, if you feel that your business is also facing similar problems, this might be the time for you to hire an accounting professional. You can also look up the internet for a real estate accounting firm in Seattle, Washington, that offers the real estate solutions your business seeks.
Who do real estate accountants cater
Businesses and individuals involved in the operation of real estate or property management mainly require the services of a real estate accountant. Whether it’s an individual real estate broker or a real estate agency that employs multiple real estate agents, they all have to deal with several financial matters.
Real estate agencies, trust managers, construction firms, housing associations, etc., are the major sectors that require the services of a real estate accounting firm to mainly manage the following.
- Assets
- Liabilities
- Income
- Expenses
- Equity
Managing all these tasks is much more than merely recording transactions. Therefore, it requires a certain level of financial expertise as well as experience.
Duties and responsibilities of a real estate accountant
A real estate accountant has to perform several different tasks to ensure that a real estate business runs smoothly and efficiently. Some of the most prominent tasks of a real estate accountant are as follows:
- Monitoring financial performance: Real estate accountants need to keep a constant eye on the performance of the properties by recording revenues from sale proceeds and rent while also tracking expenses like repair, maintenance, taxes, mortgage, etc.
- Help informed decision-making: By presenting accurate financial data, a real estate accountant makes it convenient for real estate businesses to make an informed decision regarding investment, expansion, sales, rent, etc.
- Regulation compliance: Real estate businesses are required to adhere to tax laws and financial regulations, which can be a bit of a challenge if you do not have a good real estate accountant by your side.
- Tax planning: Businesses, including real estate, can adopt various tactics to optimize tax benefits and save a substantial amount on taxes. A real estate accountant can help you with the same through deductions for interest on the mortgage, capital gains tax, and property depreciation.
- Financial reports: Real estate accountants are responsible for creating transparent and accurate financial reports, which are the key for real estate business stakeholders to make informed decisions regarding partners, investors, lenders, etc.
- Budget and forecast: Real estate agents are responsible for budgeting and forecasting for real estate businesses, which helps the businesses estimate future revenues and expenses, establish goals and develop correct strategies for growth.
Benefits of hiring a real estate accounting firm
Real estate accountants are undeniably invaluable assets to real estate businesses, bringing significant added value to every aspect of the industry. Nonetheless, here are some of the most important benefits of hiring the services of a real estate accounting firm.
- A real estate accounting firm can help you cut down on unnecessary expenses while also suggesting prospective ways to enhance business revenue by analyzing your business portfolio.
- Real estate accountants possess the expertise to manage your company’s various expenses. Therefore, they can ensure that you don’t unnecessarily pay extra for any service, amenity, tax, bills, etc.
- Real estate accounting firms emphasize reducing the debt size of a real estate business by analyzing interest rates applicable to different credit instruments and transferring the high-rate accounts to lower interest rates.
- Real estate accountant firms can manage and monitor the net worth, gross profit, profit and loss, cash flow, etc., to ensure accurate evaluation of assets and liabilities.
- Real estate accountants can provide you with performance data and help you develop strategies that can help you differentiate well-performing and poorly-performing properties apart so that necessary measures can be taken to maximize revenue and profit.
- Real estate accountants are usually up to date with the latest trends in the industry, government regulations, and tax laws. Therefore, they can help you become compliant and updated with the market.
Final takeaway
Many real estate businesses do not hire an accountant, assuming that it will help them save expenses. However, hiring an accountant is an investment that can provide business owners with several inherent benefits in the long run.