Let us for the moment assume you have decided to purchase your first (or next) piece of real estate. It is extremely important that you open up a separate chequing account from which all your income and expenses for the property are to be recorded. Many people are reluctant to do so stating they wish to reduce their banking fees and commingle everything into one bank account. Although you may save a few dollars doing this, it potentially exposes you to having to pay thousands in accounting fees should the tax authorities ever decide to audit your property.
The deposits into your account for your rental property may include rent, parking fees, laundry or even vending machine income. Some examples of related withdrawls are insurance, property taxes and a mortgage payment. Doing this will make the accounting for your property very simple and easy for your accountant and others to follow.
Having a master bank account from which any fund transfers into or out of your rental property (or properties) will also simplify matters and keep your business running smoothly.
The true sign of success in real estate accounting is to not hear inquiries from anyone whether it is your accountant or the tax authorities.