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 +1-844-405-0904, 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 and 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 manage	Customers
Renters	Customer: jobs of properties
Owners of the properties	Vendors
Your own property management company	Your 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 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
Renter security deposits	Liability: Security deposits
Rent	Income: rent income
Property management fee	Expense: 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 the 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 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 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 type	Account name
Asset	Checking account, furniture, and equipment
Liability	Payroll liabilities
Income	Property management income
Expenses	Insurance expense, utility expense

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

Step 3: Record Property Management Income

You can track income from property owners in two ways. It totally matters 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 what you have calculated in ‘Step 4’ of the Rental property company.

Limitations of Using QuickBooks for Property Management

QuickBooks provides the most used accounting solutions, even though it doesn’t offer the features required for managing rentals.

When you create invoice payments for rent collection in QuickBooks, tenants do not have any portal, in which they can analyze their monthly rent statement and make a payment. It means they do not have the ability to set up autopay. Hence, they have to pay manually each month.

For property managers, it doesn’t have features like sending mass emails, eSigning lease documents, viewing work orders, etc. 

QuickBooks may handle its best traits very well, but QuickBooks may fail for its property manager, for someone who needs more than financial features, and for someone who wants the software designed exclusively for them.

Best QuickBooks Alternatives for Property Management Software

If you feel that your business needs something else than QuickBooks, then there are many other options available. To decide which one suits your business, think and decide what is more important to you, and then choose software accordingly. Some criteria or facts are given below to decide which software you need.

• Do you want the best software?
• Do you want the software that’s most preferred for small rental property management?
• Do you need online software?
• Are you looking for something cheaper than QuickBooks?

The following softwares include financial management along with powerful tools for rental property management operations.

AppFolio

AppFolio is the best software for managing property. it has a modern-looking interface and syncs with third-party hosting sites. You can easily create rent increases according to the terms of leases, specialized reporting, and more.

The software provides you with everything you need, hence no need to go for third-party tools and applications for any task. 

DoorLoop

It is a web-based system with great pricing combined with accounting, marketing, and maintenance features. DoorLoop is a great option for fast-growing companies that are looking to expand more.

It provides unlimited for properties, users, training, support, and more. As other property management tools charge on a per unit basis, DoorLoop has a very well-designed pricing structure. You have to pay only $49/month for up to 20 units as the starter plan.

Hemlane

Hemlane is an excellent all-in-one property management tool for owners, real estate agents, and property managers. It helps you to manage property easier than any other software. 

It offers an economic low-price package for small businesses as a starter pack and also offers a premium package for growing businesses.

TenantCloud 

It is a free cloud property management software for landlords as well as tenants. Landlords can receive online payments, manage finances, and more. Meanwhile, tenants can submit rental applications, pay rent online and keep records.

It is best for landlords who have under 75 units. 

Buildium

It is a complete property management solution. It handles property accounting, company financials, reporting, and more. Buildium is best for residential rental management companies. It starts at $47/month for at least 50 properties.

Frequently Asked Questions (FAQs)

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 QuickBooks help for further support through the toll-free number +1-844-405-0904.