Keeping track of your finances is one of the most crucial aspects of running a real estate business. Whether you’re an investor, wholesaler, or real estate agent, smart money management is the key to keeping your business thriving for years to come.
However, without the right real estate accounting software, it will be difficult to manage your money effectively and grow your business.
Keep reading to find out the best real estate accounting software available for real estate professionals and to decide which is the best fit for your business.
Benefits of Real Estate Accounting Software
Before we talk about real estate accounting software and the best options on the market, it’s important to understand the importance of keeping track of your finances in the real estate industry.
The first reason you need accounting software as a real estate professional is for budget management. Keeping accurate records and managing your budget responsibly allows you to allocate funds towards new projects and various expenses like renovations, marketing, maintenance, and property acquisition.
Budget management is also important to retain employees and business partners. Real estate entrepreneurs must be confident they can pay their team members based on current cash flow and expenses through budget management.
Speaking of cash flow, real estate professionals often rely on steady cash flow from investment properties or real estate commissions to keep their business running. Tracking cash flow fluctuations with accounting software helps business owners assess their cash flow needs so they can be confident they have enough liquidity on hand to cover major expenses.
Additionally, major repairs or renovations can disrupt cash flow in the case of emergency events, and accounting software gives real estate professionals tools to create an emergency fund for these unexpected expenses.
Real estate investors and agents must deal with complicated tax regulations on a regular basis. Accounting software can help to stay compliant with tax laws by automatically categorizing expenses and generating comprehensive tax reports like Schedule E, Schedule A, and Form 1099.
Drawbacks of Real Estate Accounting Software
Real estate accounting software is essential for any real estate business in today’s world, but there are still some downsides to consider:
- Cost: Accounting software generally operates on a monthly subscription plan and can be expensive, especially for small real estate teams. Some software programs come with an initial setup fee in addition to monthly costs that can be unsustainable for small businesses or individuals managing a few properties.
- Learning Curve: Managing finances in real estate is complicated, which means the software used to do this also requires a learning curve. The software must be customized to manage different property types, income sources, and tax regulations for real estate professionals.
- Data Entry Tasks: Accounting software also requires accurate data entry skills to work effectively. Any mistakes or inconsistencies in data entry can lead to errors in financial statements and tax calculations.
3 Best Real Estate Accounting Software
Having the right financial management tools can make or break your business. The real estate accounting tools we’ll discuss have all the features you need to run your business effectively and generate detailed reports to assess your company’s performance.
FreshBooks started out as a small platform for managing invoicing operations for small businesses in the Toronto area, but has since grown into one of the premier small business accounting tools on the market.
The software is used by entrepreneurs and small businesses in over 150 countries around the world and continues to garner recognition from powerful partners like Barclays Bank and Fidelity.
FreshBooks recommends new users to start with a free 30-day trial before moving to a paid plan. This approach allows small business owners to test out the software before committing to moving their entire accounting operations onto the platform.
Top Features of FreshBooks
While FreshBooks might not be for everyone, there’s still plenty to love about this innovative accounting software. Let’s take a look at what FreshBooks has to offer.
Basic Tools for Individuals
FreshBooks’ entry level plan is the Lite plan which is tailored to self-employed individuals or one-person teams. The Lite plan only gives business owners the ability to handle five billable clients and accept all major credit cards for payments.
High-Level Invoicing Tools
FreshBooks is known for their invoicing tools, which is one of its biggest selling points. Each plan gives users unlimited invoices that can be customized using different templates for various invoicing purposes.
FreshBooks has the ability to set up recurring payments through invoicing as well as adding discounts for select customers. They’ll send users push notifications when customers view or pay invoices on desktop and mobile devices.
Believe it or not, but one of the primary benefits of FreshBooks is its customer service and phone support. Other large accounting software platforms fail to provide users with timely customer support when issues arise, which makes FreshBooks a unique player in the industry.
Cons of FreshBooks
FreshBooks is a great option for small teams and individual real estate investors, but it’s not ideal for everyone. Here are the downsides:
- Not powerful enough for large real estate businesses and high-growth companies
- Highest-tier plan only supports two team members
- Lite plan lacks important banking tools like reconciliation and CPA access
- CPAs don’t have access to audit trails and reporting features
FreshBooks has four pricing plans to cater to business owners of various sizes.
First is the Lite plan which starts at $7.60 per month and includes basic features for individuals running a small real estate business. The Plus plan starts at $13.20 per month and includes 50 billable clients, bank reconciliation tools, and comprehensive business health analysis.
The Premium FreshBooks plan is best for entrepreneurs running a growing real estate business with lots of moving parts. Starting at $24 per month, the Premium plan includes profitability tracking, unlimited clients, and custom email templates. The Select plan requires a quote from FreshBooks and includes additional tools like reduced credit card fees and one-on-one training.
The next accounting software solution that’s a top player in the industry is QuickBooks. Initially released in 1992, QuickBooks is the go-to accounting software for business owners of all shapes and sizes.
The platform is highly scalable for both small and large real estate teams, which means entrepreneurs looking to grow their business in the future can start on a lower plan and work their way up to a higher plan with more features for a larger team.
Top Features of QuickBooks
QuickBooks is a powerful accounting software for real estate professionals who need an all-in-one solution for their accounting needs. Let’s take a look at some of its top features.
Advanced Accounting Tools
QuickBooks has one of the most advanced suites of accounting tools among all financial software programs today.
The platform makes it easy to keep accurate records with expense tracking tools to categorize expenses. They also have a user-friendly dashboard showing income fluctuations and cash flow projections for the business.
QuickBooks has integrations with over 750 tools and add-ons that boost efficiency for your business. Their own branded add-ons make it easy to approve timesheets for employees and prepare for upcoming taxes with custom reporting.
While QuickBooks has a learning curve for new users, there’s plenty of online resources to get up-to-speed with the platform.
Visit the QuickBooks resource center to find video tutorials and more information on how to use the platform effectively.
Cons of QuickBooks
QuickBooks is one of the most well-known accounting software on the market, but there are some drawbacks to consider:
- Premium-priced accounting software
- Limited amount of users allowed for each plan
- Difficult platform to learn when first starting out
- Advanced features of QuickBooks come with an extra charge
With significant brand recognition often comes higher prices, and this is certainly true with QuickBooks. The Simple Start plan starts at $15 per month while the Essentials plan that supports 3 users starts at $30 per month.
Larger real estate businesses should look to the Plus or Advanced plan, which start at $45 and $100 per month respectively.
Xero is another online accounting software that positions itself as a more budget-friendly option than QuickBooks and other competitors. Its main selling point is that it’s a cloud-based program that supports unlimited users with integrations to over 1,000 third-party applications.
Top Features of Xero
Xero is a great option for real estate professionals looking to manage their finances with large teams on the go. Here’s the top features to consider:
As we mentioned, Xero supports unlimited users on all subscription plans. This feature is especially noteworthy because most entry-level plans for accounting software limit the number of users or charge extra for additional team members.
Custom Dashboard and Reporting Tools
Xero has a visually-appealing dashboard that gives real estate business owners a comprehensive overview of the core metrics that drive their business.
Users have an easily-digestible view of cash flow, unpaid invoices, and past due bills from tenants or contractors.
Xero is known for being extremely user-friendly and doesn’t come with the same learning curve as QuickBooks. Their dashboard layout is perfect for business owners who want to see a quick snapshot of their business and essential tasks that need attention.
Cons of Xero
- Virtually non-existent customer support
- Entry-level plan has strict limits on invoices and bills
- Not as many advanced features as competitors
Xero is ideal for business owners who don’t need the advanced accounting tools that QuickBooks offers and are looking for a cost-effective option for their accounting needs.
The Early plan includes 20 invoices per month, automated bill capture, and advanced reporting and starts at $7.50 per month. Xero’s Growing plan starts at $21 per month with unlimited invoices and bulk reconciliations, while the Established plan is $39 per month with expense claiming and the ability to conduct transactions in multiple currencies.
Ultimately, your decision on which real estate accounting software to choose depends on the size of your business and the complexity of your financials.
Large teams with high sales volume may opt for a robust accounting solution like QuickBooks, while smaller teams and growing businesses should look at FreshBooks or Xero for basic accounting tools and reporting capabilities.
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