Are You Using Bookkeeping To Boost Your Real Estate Business?

By Andy Mulholland

He has a background in leading a top real estate team for over a decade and an understanding of the critical role of clear financials, Andy, along with his wife Ellyn, a seasoned real estate CFO, co-founded Simple-Numbers.

Many people view bookkeeping as just a way to prepare their real estate business for tax season, but it’s so much more than that. While bookkeeping does assist with taxes, its real value lies in monitoring your business’s progress. Here are two perspectives to help you understand the importance of bookkeeping:

Tax lens. The first reason to maintain proper bookkeeping is for taxes. Keeping your books organized ensures you’re ready for tax season at the end of the year. It’s a practical approach that eliminates stress and keeps you compliant.

Business health lens. Another important reason to maintain your books is to understand your business’s health. Bookkeeping is the language of business, and if you can learn to read it, you can get an intimate picture of how your business is doing. You can check whether your business is thriving, highlight areas needing improvement, and uncover ways to boost profitability. If you’re only bookkeeping for tax purposes, you’re missing out on crucial insights that can help you make informed decisions.

Be strategic, not emotional. Using your bookkeeping to help with business decisions should be part of a larger project of making strategic decisions instead of emotional ones. For example, investing in a new lead source just because there’s available cash might seem logical but could lower profitability. Thoughtful and data-driven decisions are always the best way to achieve better results.

The value of an economic model. To make informed business decisions, having a clear economic model is essential. Setting profit margin targets and using bookkeeping to monitor your progress enables smart choices. When done correctly with a real estate-specific chart of accounts, bookkeeping becomes a powerful tool for determining what actions to take and when.

If you need assistance with bookkeeping or want a clearer understanding of your financial status, reach out today. You can email andy@handyandyrealtor.com. I’m here to guide you every step of the way.