Why are accounting tools important for vacation rental management? In a nutshell, irrespective of whether you’re a vacation rental property manager or owner, specific software solutions can help you manage different accounting tasks as well as your business finances just like an accounting pro.
Besides streamlining a variety of accounting processes, most accounting software solutions calculate formulas instantly in order to keep business records always up-to-date. As a result, you’ll be able to make more informed decisions faster while spending less time focusing on admin work and more time on what matters most for your business. Since there are numerous accounting software solutions available on the market nowadays, here are the most important tools recommended by industry professionals.
- The Unit Ledger
Showing all the money received and paid out in chronological order, the unit ledger is a core feature of any vacation rental accounting system. Although vacation rental property managers are typically required to keep a ledger for each property owner, maintaining a separate unit ledger for each property as well will allow you to set up a more organized system.
One of the greatest things about using an accounting software solution specifically developed for vacation rentals is that it enables users to review, edit, and print ledgers for each vacation rental owner and property. Additionally, a dedicated accounting tool will allow you to identify discrepancies by reconciling the balances in the unit ledger with bank statements.
- Financial Reporting
With the help of financial reporting tools, you’ll be able to automate the collection of financial data from unit ledgers. Because modern financial reporting software solutions usually gather and collate information in an easy-to-use dashboard, they provide greater visibility and insight into the workings of a vacation rental business. This is possible because users have the option to summarize information for different audiences (e.g. property owners, managers, or accountants).
By using financial reporting software, vacation rental property owners and managers will also be able to issue different financial statements, including P&L statements, balance sheets, cash flow statements, and statements of changes in equity. All these reports enable vacation rental owners to track different trends that can impact their financial goals.
- Tax Preparation and Reporting
What’s so great about tax software solutions? In a nutshell, tax software assists the taxpayers who have little to no tax knowledge in preparing and submitting the tax forms required, getting all the credits and deductions they qualify for, and avoiding IRS audits. But even though tax software vendors continuously update tax law details in their systems to ensure regulatory compliance, we also suggest consulting with a tax professional if you have a complicated tax situation. While enlisting the services of a tax preparer is more expensive than investing in a basic accounting tool, a professional can save you a lot of time and stress, identify costly mistakes, and indicate some tax breaks that a software solution might fail to uncover.
- Payment Processing
Payment processing software provides vacation rental businesses and property management companies with the means to process different types of payments from guests and other businesses as well as payments to employees and third-party service providers. By using this type of software, a vacation rental business owner or manager can easily avoid payment processing errors and ensure that payments are always submitted on time.
- Trust Accounting
Handling trust accounts correctly without the right tool can be quite complicated. Because trust accounting software solutions provide various features that can fit different needs and demands, it’s important to find a system that allows you to set up separate ledgers for trust and business accounts, view all the accounts and transactions associated with a property owner, generate reports required for trust accounting compliance, and carry out specific month- and year-end processes. Software that is designed specifically to support trust accounting should also help you stay compliant with all applicable rules and regulations.
- Revenue Management
Effective revenue management basically means renting the right vacation rental to the right guest, at the right time, for the right rate, through the right channel. Based on vacation rental data, a good revenue management system will use different algorithms to perform real-time analyses and calculate ideal booking rates according to current market conditions. Revenue management software will also centralize all your revenue streams and automate manual workflows, helping you close your books quickly and accurately.
All these accounting tools are necessary in order to efficiently manage some of the tasks involved in running successful vacation rentals. On the downside, using separate software could lead to a series of compatibility problems that may prevent them from functioning properly. To avoid these problems, a better idea would be to choose a complete lodging management software solution, which provides a wide range of features that go beyond accounting. For instance, our vacation rental software offers all the accounting tools you need and many other features that can help you take your vacation rental business or property management company to the next level. To find out how our software can make your business run more efficiently, watch our demo or get in touch with our friendly professionals today!