To record rental income in QuickBooks Online, you need to generate an invoice for each tenant and record a sales receipt or directly book rental income when payment is received. Recording rental income involves multiple steps, including those for a single property and for multiple properties.
In this guide, we walk you through setting up a record for rental income from single properties and create invoices for these properties. Also, discuss multiple properties, such as how to create a class for each property that helps to record rental income in QuickBooks Online. So, go through this informative guide for a better understanding.
Why Does Proper Record Rental Income Matter?
Always keep your record of rental income, which helps you in various ways.
- You can track tenant payments and outstanding dues.
- It helps you to understand which property gives more profit.
- Helping you to prepare and improve your tax accuracy without confusion.
- You can generate a financial report easily.
- Always avoid duplicate or missing entries in your book.
How to Record Rental Income for a Single Property?
If you want to manage one rental property, you only need to set up a tenant, create the rental income service, and record payments whenever rent is received.
Step 1: Create a Customer Profile for the Tenant.
- First, you go to Sales Customers.
- After that, Select New Customer.
- Now enter tenant details such as name, email, billing address, and contact information.
- After that, save the profile.
- This helps you track rent received, unpaid invoices, and tenant history.
Step 2: Create a Service Item for Rent.
- Go to Sales > Products and Services.
- Click New and choose Service.
- Use the property name if you prefer, enter a description like “Rental Income” or “Monthly Rent”.
- Link it to your Rental Income account under the Income category
- Save the service item.
- This ensures rental income is categorized correctly in your Monthly reports.
Step 3: Create an Invoice for Monthly Rent.
- Go to the New and click Invoice.
- Now select the customer list and click on the selective tenant name.
- And add a rental income service item you created.
- After that, fill the monthly rental amount in the amount field.
- You can easily add a note about the property or period
- Save all the details and send an invoice to the tenant.
Step 4: Record the Tenant Payment.
- When the tenant pays, always receive the payment for the invoice. You can do this by clicking Receive Payment. Select the customer and the invoice you are paying.
- Always ensure that the payment amount matches the rent amount.
- And record the deposit to the correct bank account.
- Now, click on the save button and close.
How to Record Rental Income for Multiple Properties?
You want to manage more than one property. QuickBooks allows you to track each property’s income separately using Class Tracking.
It makes sure you can easily manage reports for each property, helps to understand which property is more profitable, and keeps clean tax records.
Step 1: Select an Invoice or Sales Receipts
- Firstly, create a recurring invoices for each tenant for the monthly rent.
- Fill the description field with correct information, such as the property address.
- If you are using the classes, ensure that you always select the appropriate class for that property from the dropdown menu on the invoice.
Step 2: Use a Class Tracking for each Property
- Firstly, ensure the class features are enabled in your QBO. If not, create a class for each property. Go to Settings, click on All Lists, then select Classes.
- When creating a new class, enter the correct class, like Property A, Apartment 1, Building 2.
- Save and repeat for each property; it’s the most effective way to track profit for each property.
Step 3: Assign Classes When Recording Rent
- When creating an invoice and sales receipt, or bank deposit, select the tenant.
- Select the Rental Income item.
- Choose the Class that corresponds to the property the tenant occupies.
- This ensures your financial reports show your income property-wise.
Step 4: Use the Report to Analyze Property performance
- Run a financial report to check the profit and loss statement or the balance sheet report.
- You can use the display filter to select the class according to the property, and see their financial performance and side-by-side format.
Recording Rental Income Without an Invoice (Sales Receipt)
If you want to record rental income in QuickBooks Online without an invoice. You can use the sales receipt feature for cash flow, and you can use a journal entry for more complex situations. Here, we discuss the sales receipt and the journal entry method in steps.
Method 1: Using the Sales Receipt for a Cash Transaction
- First, you need to click on the New button, its present in the top left corner, and select the sales receipt.
- Now choose the customer from the list, and add a new tenant to the list.
- Enter a product or service and select an existing item for rent.
- Adding a new item, enter the specific name, like rental income, and connect it to the rental income account.
- Choose the right account, and ensure that the rent income is selected from the income account list.
- And select the undeposited funds for the deposit option.
- Fill in the date or any required details and click on the save button.
Method 2: Use the Journal Entry for a Complex Situation
- Click on the New button and select Journal entry.
- Now, click on the asset account for the debit of the amount of the rent.
- In the second line, click on the rent income account for a credit to the same account.
- You can add a description according to your specification.
- And click on save and close.
Tips for Accurate Record Rental Income.
Here we discussed some important tips that help to record rental income in QuickBooks Online.
- You have to use separate customer profiles for each tenant.
- Record rental income in Quickbooks online for multiple properties, use classes.
- Always reconcile your bank account monthly.
- Avoid duplicate entries by matching transactions instead of creating new ones.
- Use recurring invoices if the rent is the same every month.
Conclusion
It is a method that facilitates the growth of your business when you record rental income in QuickBooks Online. It’s pretty straightforward to log rental income for a unit or a collection of units. Utilizing customers, classes, invoices, or sales receipts are some of the ways that help you keep accurate records of payments. You will have a clearer overview of your business through reports, and better decisions, and financial management will run smoothly in your rental business when everything is recorded correctly. The article was meant to convey a lot of information. So you can have all your rental income recording-related questions cleared up in QuickBooks Online.