Read this article carefully to know the process to record transactions for rental properties for the self management company in QuickBooks Desktop. If you are the property manager, you assign service to property owners along with the property’s tenants. However, in such scenarios, you are required to create and manage two company files:

  • Rental property company: The rent is collected by you, the bill is paid by you and the entire property is managed on behalf of the manager.
  • Property management company: You are the owner of your company and you only receive all the income for managing properties.

These two company files allow you to keep the transactions of each company separated from each other.

Note: To manage two company files at the same time, you need to update your QuickBooks Desktop to the latest release.

Create a Company File For Rental Property Company 

This company file allows you to track your transactions of each property managed by you. This company will be the one where the rent income and expenses will be recorded.

Step 1: Set up tenants and vendors

You need to first set up the customers and vendors in your QuickBooks company file.

 

Properties you manage Customers
Tenants Customer: jobs of properties
Owners of the properties Vendors
Your own property management company Your own property management company

Note: The vendors can be set up as property owners as well until they are paid them their property’s net income.

Step 2: Set up accounts and items

Before moving onto the recording of any transaction, make sure the accounts and service items you use are properly set up. You can go through the following example:

Accounts
Account type Account name
Asset Checking account
Liability Security deposits
Income Rent income
Expenses Property management expense, property owner payment

 

Service Items
Item name Linked account
Tenant security deposits Liability: Security deposits
Rent Income: Rent income
Property management fee Expense: Property management expense

Do you manage commercial properties?

If you charge tenants for common area maintenance expenses (CAM), you need to set up and income and service item. Doing this will allow you to track CAM income without having to track the other fees charged by you.

Step 3: Record security deposits

Usually, the property owners require security deposits from their tenants during the initial stages of a rent period. This is known as the rental company’s liability because you will probably return the entire or a part of the amount when the rent period ends.

Some liability accounts such as Security Deposit can also be used to track each tenant’s deposit.

  • From the main menu, choose Banking and then Make Deposits.
  • Choose the tenant from the Received From ▼ dropdown.
  • Click on the From account ▼ dropdown options and choose the security deposit account that you have set up.
  • Provide the amount and then choose Save & Close.

Step 4: Track the rent income

The rent from your tenants can be recorded in two different ways. The process you follow depends when the actual rent payment was received.

  • Record the rent income from each tenant:
    • Choose invoices if the payment is received at a later date.
    • Choose sales receipts if the payment is done at the moment.
  • Make sure you choose the same tenant and item set up in 1st and 2nd step.

Step 5: Record expenses for each property

You are required to record all your expenses including property expenses and property management charges.

Property expenses

These expenses are for maintaining the property, like utilities and repairs:

  • Record each expense as per the period when you will pay them:
    • As bills if the expenses are paid at a later date.
    • As checks if the expenses are paid at the moment.
  • Click on Customer: Job ▼ dropdown, and choose the property or tenant.

Property management fee

The property management fee depends on the property owner’s agreement. If the fee depends on the gross or net income of your property. A profit and loss report can be used to calculate the fee.

The property management fees can be tracked in a form of bill or a check. From the Customer: Job ▼ drop-down options, ensure that the correct property or tenant is selected.

How do I charge an expense to a tenant?

In case one of your tenants causes any damage to the property, the expenses can be charged on the tenant’s account in place of the owner. These costs are known as the “billable expenses.”

When you need to charge the tenant, you can include additional expenses to the tenant’s invoice or sales receipt.

  • The expense will be recorded as a bill or check.
  • Click on the Customer:Job ▼ dropdown and then choose the correct tenant.
  • Mark the checkbox from the Billable column.
  • The moment an invoice or sales receipt is created, you can add the billable costs.

Step 6: Pay the property owners

Once the income and expense of each property is recorded, you can go through the due amount for each property owner.

Note: A profit and loss report can be used to check or calculate the amount that will be sent to the property owner’s account.

  • Create a check for the payment.
  • Ensure that the same property owner is chosen that you created in the 1st step.
  • Click on the Account column ▼ dropdown, choose the same owner account set in the 2nd step.
  • Open the profit and loss report to review the net income for all your properties. You will get the net income amount if the property owner left a net income part. If you don’t get it, make sure the net income is zero.

Create a company file for a property management company

A property management company file allows you to track your business’ transactions. This is file that helps you in recording income and expenses to keep a track of properties.

Step 1: Set up property owners as customers

If there are no property owners set up as customers, you need to set it up first.

Step 2: Set up accounts and items

You have to set up accounts and service items to record each transaction conveniently. Following are some of the examples that you can set up:

 

Accounts
Account type Account name
Asset Checking account, furniture and equipment
Liability Payroll liabilities
Income Property management income
Expenses Insurance expense, utilities expense

 

Service Items
Item name Linked account
Property management Income: Property management income
Utilities Expense: Utilities expense

Step 3: Record property management income

The property owner’s can be recorded in two different ways. The process you choose depends on the period when the actual payment is received.

The rent from your tenants can be recorded in two different ways. The process you follow depends when the actual rent payment was received.

  • Record the rent income from each tenant:
    • Choose invoices if the payment is received at a later date.
    • Choose sales receipts if the payment is done at the moment.
  • Make sure you choose the same tenant and item set up in 1st and 2nd step.
  • Provide the amount received from the property owners. It should be the same amount that you calculated in the 4th step of Create a Company File For Rental Property Company section.

Technical Assistance For QuickBooks Desktop

The provided solutions should help you in record transactions for a property management company. This feature is not usually used by QuickBooks users but it can be very beneficial for you. However, there are chances that you can face several errors and issues during the process. In such situations, you can dial our toll-free QuickBooks Support Phone Number +1800-324-6955 to get instant help for your errors and issues.

Record Transactions For a Property Management Company In QuickBooks Desktop

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