How To Record Transactions or Create a Company File For Rental Property Company in QuickBooks Desktop

Here in this article, we will discuss how to record transactions or create company file for a rental property you operate and also for your own management company in QuickBooks Desktop.

Being a property manager, you have to give services to property owners and occupants of those properties. In such a situation, you have to create and manage two company files:

  • Rental property company: You pay rent, pay bills, and manage the property for one owner.
  • Property management company: Here, you receive income for managing properties, this is your own company.

With the help of these two company files, you can easily keep your company transactions separate from each other. Here, we will discuss how you can?

If you are a Pro or Premier user then you can update your QuickBooks Desktop once you are ready to manage the rental property and property management files at a time.

Note: If you are having confusion which accounts you need to use, or not sure how to record the transactions? Then Consult with your accountant. If you do not have an accountant, you can find your accountant on our Find A ProAdvisor page.

Steps To Create Company File For A Rental Property Company

In the rental property company file, you can easily track all the transactions for every property that you manage. This is the record where you keep all the rental income and expenses.

Step 1: Set up all Tenants and Vendors

Set up the customers and vendors if you have not already.

Properties you manageCustomers
TenantsCustomer: jobs of properties
Owners of the propertiesVendors
Your own property management companyYour own property management company

Note: You can set property owners as sellers because you pay them the net income of your property.

Step 2: Set up accounts and items

Before you record any transaction, you need to set up the accounts and service items you use. Here’s something you can set:

Accounts
Account typeAccount name
AssetChecking account
LiabilitySecurity deposits
IncomeRent income
ExpensesProperty management expense, property owner payment
Service Items
Item nameLinked account
Tenant security depositsLiability: Security deposits
RentIncome: rent income
Property management feeExpense: Property management expense

You can also set up an income account and service item if you charge tenants for common area maintenance expenses (CAM). It helps you track CAM income separately from the other income you charge.

Step 3: Record security deposits

Property owners mostly charge security money from their renters at the starting of the rent period. This security money tenant gets back at the end of the rent period.

To track each tenants’ deposit, you can use a liability account, like Security Deposit. Go with the following options.

  • First, click on the Banking menu and then choose to Make deposits.
  • Click on the tenant, in the Received From column ▼ dropdown.
  • Click on the security deposit account that you set up earlier under the From account ▼ dropdown.
  • Insert the amount, and click on Save & Close.

Step 4: Track the rent income

You have two options to record rent from your tenants. It is depending on when you are receiving the actual rent payment.

  • Record every tenant’s rent income:
    • if you want to receive payments at a later date, then you can charge payment by invoices.
    • if you want to receive their payments right away then you can charge payment by  sales receipts,
  • Be sure to choose the tenant and the item that you have set up in above “Step 1” and “Step 2”.

Sometimes renters make late payments so that you can use QuickBooks’ finance charge feature to estimate and add the late fees to their invoices.

Step 5: Record expenses for every property

You also have to keep on tracking the expenses. These contain property expenses and property management fees.

Property expenses

Property expenses are the expenses that are used to maintain the property, like utilities and repairs.

  • Enter the expenses based on when and how you will pay them:
    • If you want to pay them at a later date then pay by using bills
    • If you want to pay your vendors right away then pay by using checks.
  • Click on the property or tenant from the Customer: Job ▼ dropdown.

Property management fee

The property management fee depends on your agreement with every property owner. If you base it on the gross or net income of the asset, you can also use the profit and loss report to calculate the fee.

You can also record the property management fee in the form of a bill or a check. Don’t forget to choose the property or renter from the drop down list of Customer: Job.

Steps to charge an expense to a tenant

Billable Expenses are the expenses when a tenant damages or don’t care about the owner’s property or tell you to have some work done then that case you charge the amount from the tenant’s account rather than the owner’s account. These costs are called “billable expenses.”

At the time when you charge the tenant, you can add these additional expenses to their invoice or sales receipt by following the below steps:

  • Register the expenditure as a bill or check.
  • Choose the tenant from the Customer: Job ▼ dropdown. 
  • Click on the checkbox in the Billable column.
  • Add the billable costs, after creating an invoice or a sales receipt.

Step 6: Pay the property owners

After recording all the properties’ income and expenses, now you have to check how much due amount to every property owner.

Note: You can also use the Profit and Loss report to check or calculate how much you can transfer to the property owners’ account.

  • First, you have to write the check for the payment.
  • Be sure to click on the property owner you have set up in “Step 1.”
  • Now, click on the owner payment account that you set up in “Step 2” under the Account column ▼ dropdown.
  • Later, you have to run a profit and loss report to check net income for every asset. If the owner of the property chooses to leave a portion of the net income then you can see the net income amount. If not, then net income must be void.

Steps to create a company file for a property management company

You can easily track your own business transactions in the property management company file. This is the place where you can keep your income and expenses for managing properties.

Step 1: Set up property owners as customers

First you need to setup property owners as customers. If you have not set earlier then do it first.

Step 2: Set up accounts and items

By setting up accounts and service items, you can easily record transactions. Here are some items you can get an idea to set up:

Accounts
Account typeAccount name
AssetChecking account, furniture and equipment
LiabilityPayroll liabilities
IncomeProperty management income
ExpensesInsurance expense, utilities expense
Service Items
Item nameLinked account
Property managementIncome: Property management income
UtilitiesExpense: Utilities expense

Step 3: Record property management income

You have two options to record rent from your tenants. It is depending on when you are receiving the actual rent payment.

  • Enter the property owners management income.
    • if you want to receive payments at a later date, then you can charge payment by invoices.
    • if you want to receive their payments right away then you can charge payment by  sales receipts
  • Be sure to choose the tenant and the item that you have set up in above “Step 1” and “Step 2”.
  • Now, insert the amount that you receive from the property owners. This is the amount that you calculate in “Step 4” from “Company file 1: Rental property company.”

Hope, this article will be helpful to you for recording transactions or create company file for a rental property company in QuickBooks Desktop. But if you face any issue while performing the above steps then you can directly reach us by dialing our toll-free+1-855-441-4417 and get instant help from our Intuit certified ProAdvisors. Our expert team of ProAdvisors is always ready to help their customers at any point in time.

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