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How do I prepare my rental property books for my CPA?

Your CPA files Schedule E for rental properties, which means they need income and expenses broken down by property and categorized correctly. If you own multiple rentals, each property needs its own set of numbers. Lumping everything together creates extra work for your CPA and increases the chance of errors.

Start by separating your records by property address. Each rental should have its own income total and expense breakdown. If you’re using QuickBooks or similar software, set up each property as a class or location so transactions automatically sort themselves. If you’re using spreadsheets, create separate tabs for each property.

Track rental income by source. Most of it is rent payments, but you might also have late fees, pet deposits, or cleaning fee forfeitures. Security deposits you return aren’t income, but deposits you keep become taxable. Your CPA needs to know what came in and why.

Categorize expenses the way Schedule E wants them. The main categories are advertising, auto and travel, cleaning and maintenance, commissions, insurance, legal and professional fees, management fees, mortgage interest, repairs, supplies, taxes, and utilities. Don’t create custom categories your CPA has to decode. Match the IRS categories and their job gets easier.

The repairs versus improvements distinction matters more than most landlords realize. A repair maintains the property in its current condition. Fixing a leaky faucet or patching drywall is a repair and fully deductible in the current year. An improvement adds value or extends the property’s life. A new roof or kitchen renovation is an improvement that gets depreciated over time. Your CPA needs to know which is which because the tax treatment is completely different.

Gather your mortgage interest statements. Your lender sends a Form 1098 showing interest paid for the year. Property tax statements from the county show what you paid in taxes. These are straightforward deductions but your CPA needs the actual documents.

Keep receipts organized and accessible. Real estate investors often lose track of smaller expenses because they paid cash or threw away the receipt. Digital photos stored by property work well. Your CPA might not need every receipt, but if you’re ever audited, you need proof for every deduction claimed.

Track mileage if you drive to properties for maintenance, inspections, or tenant meetings. The IRS allows a standard mileage deduction, but you need a log showing the date, destination, purpose, and miles driven. Recreating this from memory at year end doesn’t work and won’t survive an audit.

Provide a summary document with your records. A one-page sheet per property showing total income, expenses by category, and net income or loss gives your CPA a quick reference. They’ll verify against your detailed records, but the summary helps them see the full picture immediately.

The best time to prepare is throughout the year, not the week before your tax appointment. Monthly reconciliation means your books are already clean when December ends. If you’re behind or your records are a mess, working with small business bookkeepers in Santa Fe to get caught up before tax season will save you money on CPA fees and reduce stress on everyone involved.

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More Questions

How do I connect my bank accounts to QuickBooks?

In QuickBooks Online, go to Banking and select Link Account to search for your bank. Enter your online banking credentials to authorize the connection. Once linked, transactions import automatically for you to review and categorize.

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What is WIP reporting for contractors?

WIP (Work in Progress) reporting shows the true financial status of jobs that haven't finished yet. It calculates how much revenue you've actually earned on each project based on percentage complete, revealing whether you're ahead or behind on billing.

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How do I prepare my contractor books for tax season?

Start by reconciling all accounts through December 31 and ensuring every expense is coded to the correct job. Then gather 1099 information for subcontractors, compile equipment records, and review outstanding receivables and payables.

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How do I file New Mexico gross receipts tax?

File through the Taxpayer Access Point (TAP) portal after registering for a CRS number. You'll report gross receipts by location code and pay by the 25th of the following month.

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What bookkeeping tasks should I do weekly?

Review and categorize transactions, record receipts, and check outstanding invoices. Weekly bookkeeping takes about fifteen minutes if you stay consistent, and prevents the chaos of catch-up projects later.

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Can someone help me set up QuickBooks correctly?

Yes, QuickBooks ProAdvisors and many bookkeepers offer setup services to configure the software for your specific business. Proper setup includes a customized chart of accounts, bank connections, correct settings, and training on day-to-day use.

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Focus Point Accounting provides bookkeeping and accounting services for small businesses across Santa Fe and Northern New Mexico. Led by Stephen Vigil, a Certified Internal Auditor with 20+ years of experience. We bring an auditor's precision to your financial records.

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