How to Record Rental and Company Property Management Transactions in QuickBooks Desktop

As you know, QuickBooks is accounting software used to manage and finance your business. Let us see, how QuickBooks helps in recording transactions and expenses for rental property and managing your own management company. In this article, we will discuss how to record rental, and company property management transactions in QuickBooks Desktop. Feel free to contact our experts through the toll-free number +1-818-295-3510, to get further assistance.  

You can record transactions for rental properties that you manage and for your own management company. You provide service to property owners and the renters of those properties. So, you have to create and manage two company files:

  1. Rental property company
  2. Property management company

You can record the companies’ transactions distinct from each other by using these two company files.

To Create a Company File for Rental Property Company

In this company file, you can record the transactions like collecting rents, paying bills for each property that you manage for an owner.

Step 1: Set up the Renters and vendors

Firstly, you need to set and list down renters and vendors for your property.

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

Step 2: Set Up Accounts and Items

Create and set up account type i.e asset, liability, incomes, and expenses. List down the Item name with its linked account.

Account TypeAccount Name
AssetChecking account
LiabilitySecurity deposits
IncomeRent income
ExpensesProperty management expense, property owner payment
Service Items
Item nameLinked account
Renter security depositsLiability: Security deposits
RentIncome: rent income
Property management feeExpense: Property management expense

If you manage commercial properties:

When you take a fee from renters for common area maintenance expenses (CAM), you can set up an income account and service item. This helps you to record CAM income distinct from the other charges.

Step 3: Record Security Deposits, & Track Rent Income

At the beginning of a rent period, most property owners want to get a security deposit from their renters. At the end of the period, the rental company’s responsibility is to return all or some of the amount to renters.

You can use a security deposit account to track every renter’s deposit. Follow the procedure to record security deposits;

  • Firstly, you have to go to the ‘Banking’ menu and choose the ‘Make Deposits’ option.
  • In the ‘Received From column’ dropdown, you need to choose the renter.
  • In the ‘From account’ dropdown, you should choose the security deposit account that you have set up.
  • After that, you have to enter the amount, then click on the Save & Close button.

To Track the Rent Income:

You can track rent from your renters in two ways. It totally matters that when you get the actual rent payment.

  • Track the rent income from every renter:
    • When you get payments at a later date, you can track the rent by invoices.
    • When you get payments right away, you can track the rent by sales receipts.
    • You need to ensure to choose the renters and the item that you have set up in Step 1 and Step 2.

Step 4:  Record Expenses for Each Property

You also have to keep a record of the expenses like property expenses and the property management fee. Here are some of the expenses, which need to maintain the property like utilities and repairs;

  • Record the expenses based on when you pay them:
    • When you pay at a later date, they can track expenses by bills.
    • When you pay right away, they can track expenses by checks.
  • From the ‘Customer: Job’ dropdown, you need to choose the property or renter.
    • The property management fee totally depends on your agreement with every property owner.
  • Record the expenses based on when you pay them:
    • When you pay at a later date, they can track expenses by bills.
    • When you pay right away, they can track expenses by checks.
  • From the ‘Customer: Job’ dropdown, you need to choose the property or renter.

 You can add expenses invoices or sales receipts when the time to charge the renter.

  • Firstly, you have to track the expense like a bill or check.
  • From the ‘Customer: Job’ dropdown, you need to choose the renter.
  • In the ‘Billable column’, you should choose the checkbox.
  • If you create an invoice or a sales receipt then add the billable costs.

Step 5: Pay the Property Owners

When you track all the properties’ income and expenses, you can check how much is due to every property owner by following the below steps;

  • Firstly, you have to write a check for the payment.
  • Then, you need to choose the property owner that you have set up in ‘Step 1’.
  • From the ‘Account column dropdown’, you should choose the ‘Owner payment account’ that you have set up in ‘Step 2’.
  • Run a profit and loss report to check the net income for every property. If the property owner selects to leave a part of the net income, you see a net income amount. If not, the net income should be zero.

Create a Company File for a Property Management Company

In this company file, you can record your own business transactions like income and expenses for managing properties.

Step 1: Set Up Property Owners as Customers

In the first step, you need to set up the property owners as customers. If you already did it then, you need not do it again.

Step 2: Set Up Accounts and Items

You need to set up accounts and service items to record transactions easily. 

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

Step 3: Record Property Management Income

You can track income from property owners in two ways. It totally matters that when you get the actual rent payment.

  • Track the management income from property owners:
    • When you get payments at a later date, you can track the management income by invoices.
    • And, when you get payments right away, you can track the management income by sales receipts.
  • After that, ensure to choose the renters and the service item that you have set up in Step 1 and Step 2.
  • You should enter the amount that you got from property owners. This amount is that you have calculated in ‘Step 4’ of the Rental property company.

Frequently Asked Questions (FAQs)

How Long to Keep Property Management Records?

Property management records or any other documents should be readily available if required to defend a claim later. A claim is made up to six years from the discovery date, so it is advisable to retain records for at least 7 years. 

How to Record a Management Fee in QuickBooks?

As a landlord, if you are using QuickBooks for your properties and have a manager managing your properties. All you have to do is, create an expense account for management fees. Add a new account from the Chart of Accounts list. Then, select the Account Type and enter the account name and information.

Here, you have learned how to record transactions for a property management company in QuickBooks. We hope this article has acknowledged you about creating a rental property company and property management company. In the meanwhile, you can find a QuickBooks help for further support through the toll-free number +1-818-295-3510.

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