Create a digital filing system
Manual bookkeeping systems include a series of books or ledger accounts. While these can be purchased at local newsagents or bookstores, once the pages are filled out and the receipts are added, it becomes a lot of information in one place to not only sort through, but carry around.
With this in mind, consider creating a digital filing system. Web-based filing systems mean that investors can update their books from any location, and has the added benefit of always being a click away in case information needs to be accessed in a hurry.
Know which documentation you need for tax time
It’s a good idea to talk to your accountant about what documentation the ATO requires you to keep to support your tax return and claims. A safe suggestion is to keep all your receipts (even if they are small) as it doesn’t take long for expenses to add up.
Avoid paying expenses out of pocket
A good way to ensure you keep track of your expenses is to avoid paying any expenses out of your own pocket. It is better to have your property manager pay for any property related expenses from the rent they collect from your tenants. If you can’t avoid paying something yourself, keep a summary of what you have paid for and give this to your accountant.
If you don’t have the funds to cover an expense from the rent, transfer the required amount to your property manager and allow them to pay it. This way the expense will show on your end of year summary provided by your property manager.
Prepare documents for your accountant
Either keep your monthly rental statements and invoices from your property manager or ask them to provide you with a yearly summary of your property. This summary should detail rent received and expenses paid on your behalf. This summary must be given to your accountant.
Identify gaps of knowledge and improve on them
The majority of investors don’t have an accounting background, so it is important that you consult your accountant and financial advisory before making any investment decisions. It is also important that you regularly ask your accountant about any changes to investment laws that may affect you. Of course, do your own reading via newsletters, the ATO website, and online journals to ensure you are constantly improving your strategy and knowledge.