Regardless of what kind of real estate investing you do, you need to keep track of your income and expenses. If you’re a rental property guy, you might use a specific property management application like Appfolio or Buildium.
If you do a little of everything:
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Rental properties
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Wholesaling
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Rehabs and Flipping
You may want to look at some general small business software.
Quickbooks and Quicken have, for a long time, been the mainstays of small business accounting software. Now Quicken is starting to feel the heat of competition.
Now there’s an upstart in small business software called Xero. Although Xero is starting to gain traction in the U.S., it is already popular with small businesses in England, New Zealand and Australia.
Features of Accounting Software
Both QuickBooks and Xero have the following features to help your real estate investing:
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Online accounting – accessible from any mobile device
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Pay bills/receive payments
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Automatic downloading of bank transactions into the accounting software
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Sending out invoices (which could be reminders of rent payments or property management invoices)
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Payroll – if you have employees such as VAs
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Financial reporting – reports worth reviewing to improve your business
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Quick view of cash flow – the life blood of your real estate business
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Bank reconciliation – done automatically. Would you do it any other way?
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Document sharing – among different users
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Integrated with lots of other apps – both for QuickBooks and Xero
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See outstanding balances in all accounts including renters and vendors
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Both are mobile-friendly
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Both offer free trials (no credit card required)
Differences in Accounting Software
Xero and QuickBooks seem to be feeling the heat of competition. They are starting to look more and more similar. There are still some differences though…
Of course price is the first thing many potential users want to know. The pricing for Xero is pretty similar to the pricing for QuickBooks. But you may want to scroll down with each pricing plan. There are some differences.
One of the big differences is that Xero allows for an unlimited number of users no matter which pricing plan you choose. The pricing plans for Quicken only allow you to have 1, 3 or 5 users, depending on which plan you pick. Both programs also include your accountants (Quicken gives you up to 2 accountants), so they can see your records and provide advice.
Another area for price is when you allow customers (renters?) to pay their invoices online. Credit card and other fees for QuickBooks are higher than Xero.
In fact, when you look at what you get for the price across the board, Xero has more features for the same price in every category except the most basic.
Because Xero was developed in New Zealand and only recently came to the U.S., payroll is not set up for every state. You can see which states are supported and sign up for a notification when Xero supports your state. QuickBooks works for every state.
Xero also has a feature, in all versions, that will fill out 1099s, whereas QuickBooks requires a ‘plus’ version to have that ability.
At the end of the day, each real estate investor needs to figure out the best way of tracking their money – whether it’s a spreadsheet or some complicated accounting software. Or, maybe the best thing for some investors is to outsource it completely.
Is it Adding Up for You?
Do you have experience with either of these accounting software tools? We’d love to hear about it in the comments section below.
Track Your Money – The tax man shouldn’t be the only one who is interested in your finances. Your finances will tell you the brutal honest truth about your business. Track them and review them.
Pay Your Bills on Time – Your vendors are critical to the success of your business. Paying your vendors on time will ensure you receive great service from them.
Stay in Touch with Your Accountant – Don’t find out about some great tax deductions too late to do anything about it. Talk to your accountant during the year so you can plan to minimize your taxes.
JP Moses
is a real estate investor in Memphis, TN, with experience ranging from land lording to note buying, rehabbing, and wholesaling. However, wholesaling is the area that he enjoys most and where he bring the most experience and expertise to his students.