When tax season comes around, it usually takes me weeks to organize rental property income and expenses for my accountant.
I’ve used several different methods to stay organized, and I’m curious what other folks do.
I don’t like using spreedsheets because I can’t put in all the information I want.
I like the expensive software for all the bells and whistles, but I never end up using it because it requires too much work to set up and maintain.
Filing everything properly still requires a day at the end of the year to organize, and it also will end up costing a lot of money if you want your accountant to do it.
Do you use what is most cost/time efficient, or what is pricey but easy, or do you just wait until April every year and make the same mistake?
I’d really like to hear what people think. Most of the people I know just wait until the last minute, and every year they get the same headache. I try to get prepared really early, and I still get into a huge mess.
It usually takes me 4 weekends to consolidate everything. I guess if I had just a SFH or 2, it wouldn’t take as long, but I have a couple of multi-units, and it takes much longer to track and organize, especially since they all use the same bank account.
When you say data input as you go, do you mean just entering numbers onto a spreadsheet and adding it up at the end?
I agree that spreadsheets do fundamentally get the job done, but they aren’t able to capture all the information I want to retain, especially for multiple properties. Like when I say that I collected $1000 rent for May, I’m limited in entering additional information (who paid it, for what period, from which unit, etc…).
I keep all paper receipts in appropriate files and update an excel spreadsheet monthly. The spread feeds into a standardized Schedule E format so when tax time comes around I simply double check my documents and copy the numbers into the appropriate line items.