Jon Bell:                               00:00                     In today’s episode, we’re talking about accounting and why it’s so important.

Julian Sage:                         00:06                     Vacation rental machine helps hosts just like you learn how to start, grow and scale your short term rental business. The show’s all about creating systems that help you automate your business, give you more time and money freedom. If you’re ready to start living the vacation rental life, then subscribe to this podcast today, come and join us on our Facebook group, the host nation, where we’ll be talking about starting, automating, and scaling a short term rental business. Now, onto the show.

Jon Bell:                               00:31                     All right, welcome back host nation. It’s Jon Bell and Julian Sage. We are here to talk to you about accounting and why it’s so important for your business. And without further ado, let’s just jump straight into it. Julian, why is accounting so important to having a short term rental business?

Julian Sage:                         00:48                     Jon, accounting is so important because you are running a business and this is probably one of the most tax advantageous businesses. So everything that you are purchasing, all your furniture, all your amenities, your utilities, these are all business expenses which can save you money on your taxes. And because this is such a profitable business, you are going to be wanting to find ways to be able to save money. And one way to do this is to be able to do tax write offs.

Julian Sage:                         01:16                     Now, I know firsthand how overwhelming it can be putting everything on your personal credit card and then trying to go back and then itemize everything and saying, Oh well this is a business expense. This is a personal expense. This was, Oh what I used for the paint for the walls.” And it becomes a lot. So one of the ways that you can better organize yourself and stay on track is if you have set up a business like an LLC, you can get a business credit card.

Julian Sage:                         01:44                     This is one of the ways that you can be able to better organize your expenses because you are just purchasing everything on a business credit card and it’s going into your business bank accounts. So when you sync up your Airbnb listing to direct deposit into your bank, you can pay for these things with your business credit card. That is just one step to be able to really organize things and it makes it a whole lot easier for you.

Julian Sage:                         02:05                     If you are not doing that, then I would recommend going with some type of accounting software. I know that QuickBooks is a very popular one. I’ll include a link in the description so you can sign up for that. But this is a personal thing where it’ll be able to give you a better statistics on what you’re spending on. You can tag things, you can be a little bit more organized. And it’s just a way that if you are maybe commingling your accounts, you can at least keep track of it. And I know not everybody might be setting up a business right away, but it is something that will save you a lot of time and a lot of headache.

Julian Sage:                         02:37                     Now I know Jon really doesn’t like numbers. He really doesn’t like talking about this stuff. So Jon did something a little bit different, if you want to talk about that.

Jon Bell:                               02:47                     Well, you know I use what I can. I always do a lot of shopping. So one of the things that I do use and do, it’s almost considered a pro tip, is you know when you go to the register and it says, I get a printed receipt or emailed receipt, I make sure I get both. You know why? Because I’m going to lose the receipt probably 10 steps outside the door, but I got the digital receipt that I could then send to an accountant or to my assistant that can then categorize those items accordingly. It’s very important that we put each purchase in the right category. Therefore, we know how to depreciate things later on.

Julian Sage:                         03:23                     As Julian said, this business makes so much money that you’re going to have to find so many different ways to kind of dilute it in some sort of way. That’s my depreciation. Your accountant will almost love you by the amount of stuff that you can depreciate because we buy furniture by the store. If you’re really doing this thing, you’re really going in, you’re buying all this stuff, you got all this stuff to depreciate.

Jon Bell:                               03:46                     One of the biggest things that you’re really going to need if you don’t do this intermediate accounting in between each purchase, you’re going to need a killer, killer tax prepare. If you don’t have one, you need to find you one, one that tells you exactly what categories things need to go into because this is what’s going to save you when it comes to filing time.

Julian Sage:                         04:07                     Now it can be overwhelming with just one listing and you’re just maybe furnishing, let’s say just like a basement unit like myself, but when you start talking about 20 listings, 30 listings, that’s a lot of properties with a lot of expenses, a lot of utilities, a lot of things. It’s just going to be way too much.

Julian Sage:                         04:26                     So Jon, how do you even handle all of these properties? All of the stuff that you’re purchasing?

Jon Bell:                               04:31                     Yeah, you said it right. Starting out, considering at only one, it’s so little in the beginnin. I really didn’t have the right stuff in place to kind of capture all this stuff, but as I’ve grown, you’re going to want to capture this stuff almost down to every unit purchase. You want to compare every unit to each unit to let you know which one;’s more profitable.

Jon Bell:                               04:52                     Some of the fun things that you can do with this data is now you’re able to kind of do your own testing. I have a couple of units that are different colors. I’m able to play on revenue and see “Hey, does this certain color attract a certain guest or more guests? Do I need to paint or do things within this color theme?” When you can get to that level of detail, you are a pro, so you want to do that.

Jon Bell:                               05:18                     One of the other things that you can get if you’re trying to get there from starting out, but you’re not there already, there are plenty of apps in the app store that you could use and capture receipts and start categorizing things. You can go ahead and get your own version of QuickBooks if you think you can do it on your own. For me, it’s not one of my best suits so I have to go out and get somebody else to do it for me. I want to stay focused on build my business and somebody else just telling me, “Hey, you’re good,” and that’s great for me.

Julian Sage:                         05:47                     Right, Jon. Because you are operating a business, everything that you’re going to be doing is a business expense. So if you’re traveling to units, if they are farther away, that driving is a business expense, that gas to get to the property is a business expense. If you’re flying over to Costa Rica to look at some properties, that flight is a business expense. All of these things are business expenses that you are able to use as tax write offs for your business.

Julian Sage:                         06:13                     So if you want to be able to be in charge and you like keeping track and staying organized, then use those softwares that are out there like QuickBooks. Be on top of that. Set up LLCs, set up the business accounts, set up separate credit cards. But if you don’t want to deal with any of that, then finding a tax professional, someone that can help you to operate your business and to be able to help you keep more money and save more then you definitely want to outsource that. Focus on what you’re good at and outsource everything that you’re not.

Julian Sage:                         06:48                     So question of the day, what are you going to be using? Are you going to be using accounting software or are you going to be outsourcing it to somebody else? Leave it in the comment section down below. And until next time, host nation, keep on hosting.

Julian Sage:                         06:59                     Hope you hosts found value in this episode, if you did, please go on over to iTunes and leave us a review as that would greatly support the show. If you’d like to connect with Jon, the community, and I, then go on over to our Facebook group, the Host Nation. Talk to you hosts in the next episode. Keep on hosting.