How many other businesses let strangers into their business to do the things that they would normally do in their own homes? Eating, sleeping, showering, cooking, watching TV, spending time with family and friends, making plans for their day, making memories, making messes.
The vacation industry – hotels, B&B’s, vacation rentals, short-term rentals, holiday rentals – is a growing market that is still evolving and has yet to reach its full potential.
More and more vacationers and businessmen/women are choosing short-term rentals over hotels for their travels. Though the reasoning for the popularity of vacation rentals is up for debate, many professionals believe guests enjoy connecting directly with owners, having free-reign of the whole house (in some cases) as well as the privacy and convenience that so many vacation rentals offer, not to mention a potential savings vs. renting several rooms at a hotel and eating out for every meal.
The vacation industry – hotels, B&B’s, vacation rentals, short-term rentals, holiday rentals – is a growing market that is still evolving and has yet to reach its full potential. More and more vacationers and businessmen/women are choosing short-term rentals over hotels for their travels. Though the reasoning for the popularity of vacation rentals is up for debate, many professionals believe guests enjoy connecting directly with owners, having free-reign of the whole house (in some cases) as well as the privacy and convenience that so many vacation rentals offer, not to mention a potential savings vs. renting several rooms at a hotel and eating out for every meal.
If one was to ask owners how well their business was succeeding many, if not most, of them would comment on the number of nights they have had booked, how many individual bookings they accrued, how many guests they’ve hosted, how far into the future their rental is booked, or how many positive reviews they had received. Few would mention what the actual profit is and, as a numbers guy, that’s what I want to know. As a bookkeeper, my focus is not simply on the number of nights booked but whether my clients’ rentals are reaching their full potential financially or not.
Can having a dedicated, knowledgeable bookkeeper really help my vacation rental business reach its full potential? Is the profit worth the investment?
Can’t I just rely on my CPA or other tax professional to make sure things are as they should be?
All good questions which should be taken seriously if you truly want your business to be ahead of your competition. If you are doing the books yourself, I would recommend considering how much time you are taking and what it is worth. What are you especially good at that would be a more valuable use of your time? Is marketing your strong suit – bringing in more guests? Maybe you have had to put off something around the rental that could improve guests’ perception of their stay – landscaping, redecorating, making an extra-nice information book or welcome package? What would you rather do with that weekend you spent searching for that receipt, figuring out what that credit card charge was for, or why the books just aren’t balancing?
Having a dedicated bookkeeper may very well affect the success of your business. Whether s/he is in-house or you choose to outsource doesn’t matter so much as whether they are knowledgeable in your industry, make your life and owning a business less stressful, and add value to your business. The financial reports (which you need to know will be on-time every time) can make decision making less taxing and since you will be better informed, the decisions will be based on facts and not what you think/hope might be a good idea.
Many (not all) tax professionals will treat your short-term rental as if it is a long-term rental, which will decidedly affect your bottom line. Also, if you have a dedicated bookkeeper who will customize a few extra reports, you can better predict what affects a change in price, marketing to a specific interest group or family size, or adding a benefit (tickets, coupons) will have on your bottom line.
Be very picky about who you allow to handle bookkeeping for your short-term rental business. The vacation rental business truly is like none other and so are your books. Make sure to hire someone who knows your industry and can add value to your specific business. Choose someone who can not only keep your records accurately but also customize reports to fit your specific situation. Whether your books are behind or perfectly up-to-date, your vacation rental business can benefit from having a bookkeeper who will follow through to make sure you have everything you need to succeed even working one-on-one with your tax professional. Depending on the type of record keeping your bookkeeper uses can also make a significant difference in the way you see and understand your finances. Do you know how much money in your account/s is truly yours to keep?
Sure, you may be able to hire a virtual part-time bookkeeper for $50 a month but do they truly know your business? Are you happy with just getting the bare bones and not being able to see what could be improved? What if you have questions and need answers now? Only you can decide what a good bookkeeper is worth to you.
I am the owner and bookkeeper of Vacation Rental Bookkeeping. With my experience (I owned a vacation rental in Chattanooga, TN) in the short-term rental industry, I can not only keep your records accurately but also customize reports to fit your specific situation whether you have one rental or fifty. VRB can actually save you money by working directly with your CPA or another tax preparer. If I know what he/she wants to get your taxes done quickly that cuts down on the number of hours you may have to pay him/her to complete your taxes. Need to know what money is yours to keep? I typically use the accrual method which keeps a running total of what is yours and what will have to be returned. (You will have a running total of what is in the account as well.) Access to a bookkeeper who will lend an ear without charging by the hour is also a rare benefit to VRB. Contact us to see how we can fill your bookkeeping needs.
Ryan Gallagher