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Accounting for Property Developers
Some people think property development is as simple as owning some land, sub-dividing and making a handsome profit. However, real estate development can include anything from renovating and then re-leasing the existing building to purchasing a vacant block of land and then sub-dividing it for sale or building development.
As a developer your role is to co-ordinate the process which usually involves contracting with the builders to construct the buildings at an agreed price. Make no mistake, it’s a complicated business and you need to finance the deal, obtain public approval, design the buildings and schedule the development process. You control the development and put together the marketing plan to sell the finished product. It’s challenging and with the potential for high returns, there is high risk. Along the way you may have to work with architects, town planners, engineers, surveyors, inspectors, contractors, leasing agents and solicitors.
Given the importance of the financial aspects of the development project you need an accountant who understands the mechanics of property development. Over the past decade, Sam Hamersley and his Perth based team of accountants have mentored a number of property developers through the process. It doesn't matter if this is the first property development you have undertaken or if you're an experienced developer, you can benefit from our experience and industry knowledge.
STARTING A PROPERTY DEVELOPMENT BUSINESS?
Starting a business is a bit like building a house. You need solid foundations including the right business structure, accounting software, adequate and appropriate insurances, marketing, a website and social media channels.
Your choice of business structure is critical and there are a number of different options such as sole trader, partnership, company and trust. Asset protection is a key consideration when selecting a business structure because of the high risks associated with the property development industry. When deciding on the right business structure you also need to take into account your family situation, forecast level of profit and your future plans regarding admission of new business partners.
Accounting software is another brick in the wall of your business foundations. Again, the wrong choice can be catastrophic because poor business records are one of the biggest causes of business failure in this country. You need up to date, accurate financialrecords to make informed business decisions which is why we insist your accounting software matches your business needs and level of accounting skill. Using a sophisticated double entry accounting software program without a reasonable level of accounting skill can create a 'computerised shoebox' and you also need to consider cloud accounting options. Here at Velocity Accounting Group we aim to minimise the cost of compliance for you but shoebox records defeat the purpose. For that reason, once we evaluate your business needs and skills we then train you to use the software. We support a range of accounting software programs but do have a preference for cloud based solutions like Xero where your data is stored ‘in the cloud’ rather than on your local hard drive or server. This means you have access to your financial data from anywhere, at any time, using any device including your mobile phone or tablet.
As you know, to build a house you also need the right tools. When 'constructing' your business we also use a number of tools including our start-up expense checklist to identify all your potential establishment costs. It dissects your start up costs into several categories including tools, equipment, IT expenses, professional fees and marketing costs. These figures can then be transferred into a cash flow budget template to produce a projected trading statement for your first year of operations. For a property developer, your van or ute is arguably your most important business tool. You can download our Motor Vehicle Tax Guide from the resources section of our website to learn more about the alternative methods of claiming your vehicle expenses and the distinction between a business and private trip for tradesmen. In addition, through our affiliate partners we can also assist with vehicle finance (chattel mortgage, CHP or lease) and get you fleet pricing on your new car, ute or light commercial van that could save you thousands of dollars.
That’s really just the beginning because as accountants we can do some financial modeling and prepare some ‘what if’ scenarios to identify your best and worst case profit scenarios. Next, using industry benchmarks we can compare the performance of your business against your peers so you understand what is working in your business, what's not working and what needs working on.
MARKETING & GROWING YOUR BUSINESS
Most property developers rely on their reputation and referrals to grow their business and while these ingredients remain important, in the digital age you also need to focus on your online presence. Increasingly local searches like ‘Property Developer Perth’ are driving traffic to your website and often your website is the first touch point with a potential new client. As you know, you only get one chance to make a good first impression and your website and marketing can be the difference between boom and gloom in the digital age.
One of our biggest points of difference compared to other Perth accounting firms is our marketing expertise. We can assist you with your branding (business name, logo and slogan), your corporate brochure and help you harness the power of social media to win more referrals. Over the past few years we have worked with dozens of clients to help them create affordable, quality lead generation websites. If you need advice and direction with your website content including video production we can help you. Not only that, if your website lacks calls to action or lead magnets we'll help you build them plus we'll introduce you to strategies like re-marketing and search engine optimization to drive more traffic to your website.
We strive to give you a serious competitive edge and if you aren’t using some of these marketing techniques your business probably won't reach its full profit potential.
The marketing process begins with your branding and we have worked through the process with dozens of clients over the years and using some online resources we can help you build a modern brand that resonates with your target market. We can even help you develop your stationery at a fraction of the cost of engaging a graphic artist or marketing consultant.
We recognise the fact that property developers want more clients and more profit so we also give you access to one of the world’s most successful marketing programs, the ‘Business Growth System’. It contains more than 80 breakthrough marketing strategies supported by videos, templates and checklists. Access to this ‘vault’ of resources would normally cost you $6,000 per annum, however, as a client of the firm you get unlimited FREE access. In addition, you also get unlimitedaccess to the ‘Grow Your Business in 5 Days’ video training course that could have a massive impact on your future business growth.
Our marketing expertise is designed to help you accelerate your business success and we are not your average firm of accountants who just keep the score. No job is too big or too small for the team at Velocity Accounting Group and we offer property developers a range of accounting, taxation and business coaching services including:
- Start-Up Business Advice for Property Developers
- Advice regarding the Purchase or Sale of your business
- Tools including the Start-Up Expense Checklist and Templates for a Business Plan, Cash Flow Budget, Letterhead and Business Card
- Advice and Establishment of Your Business Structure
- Tax Registrations including ABN, TFN, GST, WorkCover etc.
- Preparation of Business Plans, Cash Flow Forecasts and Profit Projections
- Accounting Software Selection and Training – Bookkeeping, Invoicing, Quotes & Payroll
- Preparation and Analysis of Financial Statements
- Preparation of Finance Applications
- Bookkeeping and Payroll Services
- Tax Planning Strategies
- Assistance with your Marketing including your Branding, Corporate Brochure, Property Flyers etc.
- Assistance with your Website Development, Content and SEO
- Wealth Creation Strategies and Financial Planning Services
- Industry Benchmarking and KPI Management
- Vehicle & Equipment Finance (Chattel Mortgage & Lease)
- Monitoring and Controlling Labour and Sub-Contractor Costs
- Advice & Assistance with Pricing your Services and Claiming Motor Vehicle Expenses
- Recession Survival Strategies
- Advice regarding Employee Relations and Workplace Laws
- Business & Risk Insurances (Income Protection, Life Insurance etc.)
- Business Succession Planning
We are so much more than just tax Accountants. We are business and profit builders who genuinely care about the success of your property development business. We understand the industry and if you’re looking to get your business off to a flying start or just want a fresh pair of eyes to look at your business contact us today.
If you're a committed and ambitious property developer based in Perth looking to accelerate your business success we invite you to book a FREE, one hour introductory consultation to discuss your business needs. You can expect an hour of practical business, tax, marketing and financial advice that could have a profound effect on your future business profits. To book a time, call us today on (08) 9250 4048 or complete your details in the box at the top of this page.