What accountancy software do landlords use?

smartpropertymanager. it is wonderful and free to use, tried many, this is just ace.

Whilst I agree it's overkill for 3 properties, I can't recommend Xero highly enough. I've been running my portfolio and other businesses on it for getting on for 4 years now and love it. I also introduced my accountants to it and despite them being sage to the core they now have over 30 clients that they've moved over to Xero because it's so much easier to run a business on it. One of the great things it allows a portfolio landlord to do really easily is to be able to report profit and loss down to an individual property level (providing you set up the tracking features and code each transaction to the relevant property, which takes seconds to do). This level of insight is invaluable and has resulted in us changing strategy on some properties where through looking back at prior years performance we've realised for example that a property would be more profitable as a single let than a multi-let after taking all costs into account. For anyone that's VAT registered it makes filling your returns an absolute breeze, you can literally do it in a few seconds and all from within Xero as it has a direct link to HMRC's systems. Xero also has great data import capabilities, so moving to it can be pretty simple, even from a spreadsheet based system. Another cool feature is when you send invoices by email the recipient gets a link to click on which shows the invoice and any other outstanding invoices on their own screen, which is pretty cool on its own, also if you've set up payment links such as paypal, there will be a pay it now button the recipient can click on to pay you, which is really cool. All in all it's a really clever system and they are adding further functions to it all the time, pretty much every month!

Martin this is slightly off topic - but I don't know if you are aware that HMRC do not regard the buying and letting of properties by individuals as a business. Although they allow certain expenses like mortgages, letting agent costs and repair, stationery etc - what they do not allow is rental losses to be offset against personal income. They will allow losses to be "rolled over" from year to year, so If you make a loss one year and a profit the next, you pay no tax until the losses are covered. Now if you have a day job as well and you make a profit the taxman will tax you at your prevailing rate.

One way of minimising the tax take is to legitimately charge your rental business from another bona fide business within your "group" of companies. A bit like Amazon, Google etc. A bona fide businesss that would have a legitimate reason to bill you would be a letting agency. So if you have your own "letting agency" which has other clients other than yourself, and has an official Terms of Business document between the rental business and the Letting Business and does not charge your rental business any more than other clients then (as advised by my accountant and HMRC) this is perfectly legal. It's only like getting billed by a High St agent. Now with three properties you may not glean much of an advantage from doing this - and you may not want to do other landlords lettings - but it is a way of turning your own rental properties into income which is offsettable against both earned income and your rental profits. Of course the lettings side then makes a profit on this and may be liable to pay tax - but that depends who owns it, what tax they pay, and also allows you to offset other costs against the lettings business.

I have to say that I'm shocked that so many people use accounting software. Despite having been a landlord for nearly 25 years and also being a qualified (but retired) IFA and mortgage broker and also having a passion for both tax and law I still don't trust myself to get things right or to know every trick in the book to save myself paying more tax than I need to.

The following is one of my favourite quotes so far as tax case law goes. It is from the case of Inland Revenue Commissioners v The Duke of Westminster (1936 19 TC 490), which held: “Every man is entitled, if he can, to order his affairs so that the tax attaching under the appropriate Acts is less than it otherwise would be.”

My Outlook calendar is fine to remind myself to do property inspections, EPC's, Gas Checks and re-issue prescribed information for Deposit protection and to check that rents have been paid within 3 days of the due date. Why do I need to do anything else when it's more economical to employ a professional book-keeper and tax adviser?

What am I missing?
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Reply to the comment left by "Mark Alexander" at "09/11/2013 - 12:07":

Hi Mark - I think there is a distinction between keeping your records in order to give to your accountant ( and thus keep costs down) and doing what you do- give everything to the accountant on a regular basis due to the size of your portfolio. It makes sense to do that once you get to your level. But for the smaller landlords it is probably more cost effective to do some of the donkey work yourself. I have a ten property portfolio and get charged £250 a year for doing the return and advising me on tax "strategy".

Mark, I don't think the question is "Should software be used or not?" but "Who is to use the software?" In my case Xero is used by me, bookkeeper and accountant. In your case it's just your bookkeeper and accountant using Quickbooks.

I don't think there's one right approach though, we all have different needs.

PropertyHawk's FREE FOR EVER landlord's software is very good. It can send you e-mail reminders of outstanding rents, etc.

I recommend you check it out, for yourself.

Link: http://www.propertyhawk.co.uk/index.php?page=propertyManager

Reply to the comment left by "Mark Alexander" at "09/11/2013 - 12:07":

In reply to the original question I find myself agreeing with Mark. I grudgingly wrote those words ! 🙂

I will say the following is qualified advice and no more.

The best option would be to present your accountant with what are called Working Papers which are generally Excel based sheets.

A useful tip is to list all your bank transactions for your business in a table with headings for example and try to use a separate bank account for your property/business transactions.

Example

RENT RECEIVED –REPAIRS-TELEPHONE – MORTGAGE PAYMENTS

There may also be transactions which did not take place through your bank account and instead were paid by way of credit card/ cash etc. In this case you need to keep the invoice and credit card statements. It is also a good idea to list these in spread sheet format and entitle them as CASH TRANSACTIONS

To ensure accuracy use a C/C D/C Cross Cast and Down Cast method to check your figures are accurate. I can post more information for you if you need it.

Your accountant can then easily transfer the figures from the working papers to a P&L account and Balance Sheet.

Now, once you have compiled your working papers and if you really want to get clever one of the best pieces of software available for compiling simple accounts is V.T Accounts and it will also allow your accountant to export the information into tax calculation software.

I hope this little bit of information helps.

Reply to the comment left by "Ollie Cornes" at "07/11/2013 - 12:29":

Ollie have took your advice and gone paperless on running both my property, Lettings and cleaning businesses. Brilliant! Use Camscanner app on my android phone to scan receipts when I am out and letters when back in the office. Upload to Dropbox - 48GB storage when I took on a new phone contract. The only difference is I don't use cloud accounting but instead use Microsoft Money which is PC based and inputting had to wait until I was back in the office. But there is a very clever piece of free kit on the net called Teamviewer that let's you access your computer from anywhere in the world and with an IPad screen it's like being in front of it. Spooky watching your cursor moving across the screen remotely but it works really well on both wi-fi and 3G. So now no more sitting down at the end of the day filing and inputting. It's all done on the go. And no paper and printer ink usage. Plus all I need to run my business is in a box of electronics in my pocket or briefcase. Going paperless may be old hat to some on the forums but not to me and I thank you Ollie for putting the idea into my head and making my business more efficient and cheaper to run.

I will throw in MS-Money, but not to be advised for new users as there is no support, and it is a dead end if you are not American.

But I am a little worried about the tendency to push stuff into the cloud, it is fine to put stuff there so long as it is encrypted, but make sure you have your own backups.

I have a couple of removable drives and alternate them out to the boot of the car, encrypted of course (I kind of assumed the DPA would apply).

Chris