The Importance of Implementing a Vacation Rental Accounting Software
It’s not the shiniest part of being an entrepreneur, but it is one of the most important: keeping straight books. You want to keep your numbers straight, your business in the black, and the folks at the IRS happy. Keep reading to learn about accounting software that can streamline the work that you do in your vacation rental business and help you to maximize your profits and minimize your losses.
Keeping track of all of your vacation rental income
The first thing on every entrepreneur’s mind is finding out how much money you are making from all your rental properties. In other words, how much revenue is your business generating? This is the first question that your vacation rental accounting software should be able to answer.
However, this number doesn’t tell the complete story. Your gross revenue only tells you how much money you are bringing in total, but not necessarily the expenses of operating your business. There are the larger ones to consider, like the mortgage, your HOA fees, your utilities, and more, but there are also small things you’ll want to remember. Did you buy batteries for the television remotes? What about extra garage door openers or keys? Did you buy new linens? We’d bet that you bought cleaning supplies and other maintenance items. All of these expenses need to be easy to track within your accounting software.
From there, you’ll want to calculate your net revenue. This number can be obtained simply, by subtracting the total number of your expenses from the total amount that you earned throughout the same time period.
While some booking platforms will claim to offer insights into these numbers, it is important to remember that they can only ever provide a small snapshot of the actual picture at hand. For example, Airbnb can really only offer you insights into the money made and earned through their site, but not others. This is true for all other platforms, like VRBO, Booking.com, and more.
Gain insights that help you maximize your revenue
Understanding these numbers, namely, where you are making the most money and how you are spending the most money, allows you to hone your efforts in the most profitable way possible.
To get to this point, you need to select and represent your data in a way that allows you to take action. What does this mean? It means that the numbers aren’t just good enough laying around on pieces of paper. You need to be able to easily interpret this data inorder to make the correct financial decisions for your business. Can you categorize your expenses to know where to make cuts? Can you check which platform is offering you the most revenue, so you know where to focus your time and attention? Can you see how your revenue fluctuates between months?
Ultimately, you need to visualize your data in a way that allows you to best address your specific business needs by taking into account everything that is critical to see in the short-term rental business.
Simplifying your accounting and saving you time
Can you run your own books? Absolutely. Is it the best use of your time? We’re not so sure. At the end of the day, you are the business owner. You want to spend time building up your business and creating more profits for yourself!
Having a solution that will run the calculations for you will lift a significant burden from your shoulders, and make running your business (not to mention getting through tax season!) much simpler.
Features to look for in a vacation rental accounting software
Just like any software investment, you want to make sure that you are getting the best features for your money! Read on to learn about what to look for when selecting your accounting software.
Centralized accounting between all listing platforms
As we mentioned above, listing channels do not necessarily sync with one another. So while Airbnb will offer you insights into their platform, no platform will offer you insights into the money you are spending or earning on another platform. To get a full picture of your business, without an accounting solution in place, you have to switch between each platform and perform the calculations yourself.
Automatic reporting for KPIs
You have goals. Your business has goals. You need data to learn whether or not you are achieving those goals and the key performance indicators that let you know whether or not you’re on track. Depending on your experience level, it can be difficult to know what to track. That’s why your vacation rental accounting software needs to provide you with some guidelines based on typical short-term rental KPIs while still giving you the ability to add in your own as you start to define more complex goals for your business.
Tax preparation software
Having accounting software implemented in your business structure can save you scads of time during tax season. With the vacation rental accounting software, tax season can feel like another day in the park.
Tax season or not, accounting shouldn’t have to be such a drain on your time and resources. The right software will be built following what industry experts would expect to see, meaning you don’t need to worry about collecting and crunching all the numbers. You can trust that the data will be represented in the exact way needed to help you maximize the potential of your business.
Integration into standard accounting software
Convenience is everything when it comes to software. Keep an eye out for software that will integrate into standard accounting software that you may use for other business or personal use, so that you can sync all of your financial transactions with one another, to create the most robust picture of your finances.
The different types of accounting software
There are two different types of accounting software you can opt for: business accounting software, or software built specifically for vacation rentals.
Business accounting software
Business software offers general accounting solutions, and in some cases, increased customization. Although these benefits are helpful, they often bring a bit of a learning curve with them. As they are built for trained finance professionals, it can be tricky for laypeople to get the hang of them and genuinely get out of them what they need.
Vacation rental specific
On the other hand, vacation rental-specific software is built specifically for your needs and experience level. This will give you insights into the most important information for your needs, which will allow you to make the best day-to-day decisions in running your business.
What’s the right vacation rental software for you?
It should be clear by now that software specific to the vacation rental business is likely ideal for your short-term rental needs. To determine whether or not a software is the right software for you, we advise you to look at two key factors: understanding your personal accounting needs and identifying your own expertise level.
Understanding your accounting needs
First, take into account the complexity of your business. Do you need elaborate accounting software or just something to do more basic bookkeeping? To answer this, you can think of a couple of key factors.
If you’re managing only a single property or even just a couple, you probably just need something on the simple side. On the other hand, if you’re managing a fleet of properties, you may have more complex needs. Additionally, you’ll want to consider the number of channels your properties are listed on–each will need its own profit and expense tracking. Ultimately, you should be looking for a tool that makes it easy to bring all this information into one place without too much leg work on your part.
Identifying your expertise level
Look, maybe you’re a former accountant beginning their work in the short-term rental space. If that’s the case, live out your professional dreams with the software of your choice. You can customize each step of the process based on your ideal client: you!
However, if you, like the rest of us, live with only a pretty fundamental understanding of accounting, then you probably want a more simplified solution, so that you can quickly get in and out with the information that you need.
Keep it extra simple: work with Futurestay
Futurestay is a seamless-to-use solution that offers you clear visibility into your income and expenses across channels. It will conveniently put this information into visual reports that allow you to easily take action and create solutions that allow you to maximize the profits in your business and even scale when you are ready.
Best of all, Futurestay is a solution that scales with your business–whether you’re looking for elaborate data to guide your decision-making process for your fifty properties, or you’re just looking to survive your first tax season as a short-term rental owner, Futurestay has the tools you need to save time and earn more money.
Futurestay pioneered the first operating system designed to empower rentalpreneurs with the connectivity and automation previously out of reach for everyday people running short-term rentals. Building on its promise to help rentalpreneurs succeed at any stage, Futurestay is so much more than a platform, offering anyone with an entrepreneurial spirit and a room to rent the chance to learn, earn and grow at every stage of their rentalpreneur journey.
For more information about Futurestay:
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