How to setup QuickBooks for property management
To record transactions for rental properties, you manage and your own management business. As a property manager, you are responsible for delivering services to both property owners and tenants. You’ll need to build and maintain two company files in this case:
- Land management agency: For an owner, you collect rent, pay bills, and maintain the land.
- A property management agency: This is your own business, and you earn money by managing assets.
You will keep the transactions of the two companies apart by using these two company files.
Please note that If you’re using QuickBooks Desktop Pro or Premier, you can update when you’re ready to handle rental properties and property management files simultaneously. Also, don’t be confused about which accounts to use or how to document transactions? Make an appointment with your accountant. We will help you find an accountant if you don’t already have one.
Step 1: Organize Tenants and Vendors:
- You are in charge of those assets: Clientele
- occupants Customer: real estate work
- The property’s owners Traders
- Your very own land management agency Your very own land management agency
Please note that landowners may be set up as vendors when you pay them their property’s net profits.
Step 2: Create accounts and items as needed: Before you can report a transaction, you must first set up the accounts and service products you will use. If you charge tenants for common area cleaning, you can set up an income account and a service item (CAM). This allows you to keep track of CAM revenue separately from other fees you charge.
Step 3: Keep track of your security deposits: Many landlords request a security deposit from their tenants at the start of a lease term. That you can return all or part of the sum at the end of the rental period is the rental company’s responsibility. To monitor each tenant’s deposit, you can use a liability account, such as Security Deposit.
- Pick Make deposits from the Banking menu.
- Pick the tenant from the Obtained From column dropdown.
- Select the security deposit account you created in the From account dropdown.
- Select Save & Close after entering the number.
Step 4: Keep track of your rental income: You have two options for recording rent from your tenants. It all depends on when you get your rent payment.
- Record each tenant’s rent income as invoices if you don’t collect payment right away.
- If you get their checks right away,
- you can use them as sales receipts.
Please Note that tenants are prone to making late payments. You can calculate and add late fees to their invoices using QuickBooks’ finance charge feature.
Step 5: Keep track of each property’s expenses: You must also keep track of your expenditures. These costs include the cost of the land as well as the cost of the property maintenance fee. There are costs associated with the upkeep of the house, such as utilities and maintenance.
- Keep track of your expenses according to when you paid them:
- If you pay them later, they will be treated as bills.
- If you pay your vendors promptly, they will be treated as checks.
- From the Client: Pick the property or tenant from the work dropdown.
The fee for property management is determined by the arrangement you have with each property owner. A profit and loss report can be used to determine the charge, whether it is based on a property’s gross or net income.
The property management fee may be reported as a bill or a check. Make sure the property or tenant is selected from the Customer Job dropdown.
When a tenant harms the property or requests repairs, you charge the bill to their account rather than the owners. These costs are referred to as “billable expenditures” by you. You apply these extra charges to the tenant’s invoice or sales receipt when it’s time to bill them.
- Make a bill or a receipt for the cost.
- Pick the tenant from the Customer: Job dropdown.
- Pick the checkbox in the Billable column.
- Add the billable costs after you’ve produced an invoice or a sales receipt.
Step 6: The landowners should be compensated: You can now verify how much each property owner owes you after you’ve recorded all of the properties’ income and expenses.
Please note that you can verify or measure how much to pass to the property owners’ account using a profit and loss report.
- Make a payment with a check.
- Make sure the property owner you set up in “Step 1” is chosen.
- Select the owner payment account you set up in “Step 2” from the Account column dropdown.
- Check each property’s net profits with a profit and loss study. You’ll see a net income figure if the property owner wishes to leave any of the net income. If this is not the case, the net income should be zero.
In conclusion, QuickBooks is an excellent accounting software that almost covers all the aspects you might face when managing accounts for a particular organisation. I hope that this specific blog helped you in one way or the other and was worth your read.