Accountant vs. Software: Which is Better for Your Rental Business?

December 17, 2024 7 min read

Should You Hire An Accountant Or Use Accounting Software?

As a landlord, you have a lot of financial tracking to do. Balancing your jobs as property manager and business accountant isn’t easy. It is easy, however, to get some form of help.

While independence and a DIY attitude are in—there was a net increase of 82,367 Americans from 2021 to 2024 who became first-time landlords in the real estate industry, after all—you would not be alone in feeling overwhelmed by the accounting process. Many landlords and real estate businesses use property accounting software or hire accountants to help them with bookkeeping.

That being said, it can be difficult to gauge whether software or an accountant is what you need for property accounting. Your portfolio, size, and a few other factors we’ll dive into, are all great indicators of whether you should invest in software or whether it would be best to research accountants for landlords.

Accountants for Landlords

If you have a lot of moving parts to keep track of, hiring an accountant is a great way to put your finances into the hands of someone qualified. Finding yourself constantly stressing over the complexity of your finances? It may be time to hire an accountant.

Pros

Expertise

Hiring an accountant can be a great option for landlords, real estate agents, and property managers with bigger portfolios because they have extensive experience with complicated ledgers. However, just like in your search for the best accounting software, you’ll have to thoroughly vet your accountant before you hire them.

You can hire either a bookkeeper (someone with experience in accounting), or a CPA—a Certified Public Accountant. CPAs have extensive training and experience and must pass a rigorous exam (in addition to their degree) to earn their certification. In other words, they know what they’re doing. They have a lot of business, accounting, and tax knowledge, and can help you to maximize your deductions and credits when tax season rolls around. CPAs analyze your transactions, do your taxes, and provide key financial advice for your business.

Bookkeepers, on the other hand, keep track of your day-to-day transactions, complete payroll, produce invoices, and other basic bookkeeping tasks. They won’t have the expert advice that a CPA can offer, and they generally don’t do taxes (but they do prepare documents to be given to an accountant). Bookkeepers can be a less expensive option than CPAs, which is great if you’re solely looking for organization.

Financial Planning

With an accountant on your staff, you’ll be better equipped to plan for the future of your business. Their extensive training and experience allow for a very meticulous examination of your finances, so they may see ways for you to cut back on expenses, increase revenue, and achieve your long-term business goals.

Cons

Costly

Unlike rental property accounting software, accountants for landlords and property management companies can be quite costly. In October 2024, the average annual pay for property accountants in the United States was $73,405. Hiring a real estate accountant means making room in your budget for another employee’s salary or contractor’s fees, and if you’re a small business owner, that may be out of your realm of possibility. However, for larger businesses with a myriad of transactions to keep track of, an additional employee may be worth the cost.

Fraud Risk

Adding an accountant into the mix can make some landlords uneasy because in adding a third party, you open yourself to the possibility of fraud. It’s always possible that a bad egg accountant (employed either part- or full-time depending on your needs), can steal from you. You run this risk any time you hire a new employee, but more so when hiring someone to directly handle your finances. Additionally, you could be responsible for any mistakes your accountant may make on your taxes or bookkeeping. It’s a relatively slim possibility, but a possibility nonetheless to look out for.

Rental Property Accounting Software

If you’re looking for a way to get organized cost-effectively and quickly, then rental property accounting software may be for you. Hoping to have everything in one easily accessible place? It’s time to investigate robust rental property accounting software.

Let’s look at the pros and cons of this accounting option.

Pros

Cost-Effective

One of the major pros of property accounting software is its cost-effectiveness. A software subscription typically costs very little (around $15-70/month) compared to accountants for landlords, who as mentioned can cost you tens of thousands of dollars a year. If you’re a small rental business owner, an accountant may not be a very budget-friendly option. Luckily, there’s some great accounting software to choose from.

Customer Support

Another factor to weigh would be a support system. The best real estate accounting software companies offer support for users within 24 hours or less. Most accountants don’t offer round-the-clock service, so if something urgent comes up, you may find yourself on your own.

Hands-On

If you’re a do-it-yourself kind of landlord, then real estate accounting software is for you. With accounting software, you can be your own boss and even connect your accounts to property management software. Having your finances easily accessible and at your fingertips can give you peace of mind while making keeping track of your accounts much easier. Many accounting software platforms offer accounting tools that automate the data insertion process as well, making it that much simpler and more timesaving for you—you won’t have to waste time crunching numbers yourself (or paying someone else to do it for you).

Cons

Potential Hiccups

As with any technology, outages and glitches are a possibility. Some accounting software platforms may experience updates or bugs that leave your finances unavailable to you for short periods of time. It can be stressful to rely on a web-based ledger in this instance, which is why it’s best to regularly back up your accounting data, as although technology is the future, it does take time for kinks to be fully worked out.

Inflexibility

Not all accounting software will offer the customizability you may need, so it’s important to do your research and to choose wisely. Depending on how vast your rental portfolio is, not all platforms will be able to accommodate your accounting needs. Some have limited accounting features, a maximum number of properties, etc. However, no matter the size of your rental business, the best real estate accounting software has key features and capabilities that can make even the most complex accounting jobs simple and organized.

Recap

Knowing whether an accountant or a real estate accounting software platform is what you need can be tricky. We hope that you can now make a more confident and informed decision. Here’s a quick recap:

You may want an accountant if you:

Own a large array of properties

Are looking to increase your deductions and credits

Are willing to pay

You may want an accounting software if you:

Are looking for an inexpensive option

Prefer handling your own finances

Want your finances to be quickly and easily accessible

Conclusion

Deciding whether to hire a real estate accountant or to invest in property accounting software can be tricky. Real estate accountants offer very personalized help (but can be costly), while rental property accounting software keeps financial management in your hands (but isn’t always as accommodating). We hope that this article has given real estate professionals like you some insight into which is better for you and your real estate business.