Author: Alita Hall

QuickBooks for Property Management – Security Deposits

Security deposits are paid by the tenant to the landlord. It is meant to cover any damages done to the property by the tenant beyond normal wear and tear. As landlords, I am sure this is not news to you. What may be news to you is how to handle these payments in QuickBooks. I am going to share the method I recommend because of its ease of use. When receiving a security deposit from a tenant, I treat it as a credit to the tenant. I do this because it allows me to see, at any given time, how much their deposit is and it makes it easier to discern how much of it needs to be returned to the tenant after any charges have been accessed. To use this method, Tenant CANNOT be set up as jobs under a property address. They MUST be set up as a customer. Under these conditions, tenant security deposits are handled with the following steps: Receive the payment – There should be no invoice to apply it to. Deposit the payment – Tenant Security Deposits SHOULD have their own bank accounts. Some states require this. I think it is just good practice

QuickBooks for Property Management: Owner/Tenant Workflow

Now that we have classes, tenants, and owners all set up, it is time to talk how these three things will flow together. The workflow for property management does not have to be daunting. The goal is to make it simple, easy to follow, and repeatable. Let’s dive right in! Step 1: Assessing Rent Charges to Tenants Statement charges are a great way to assess the charge for rent. It is a register for each tenant that shows all the transactions that involve that tenant. The process for assessing a rent charge this way is very simple.  Open the tenant register and input the charge for rent. Step 2: Collecting Rent from Tenants Next, process the payment from that tenant. You can right click on the tenant name and choose receive payment. Here, it is imperative to make sure you have the right account listed that you want the payment to post to. If you do not have a main account where all tenant payments are kept, please pay attention to this. It will save a lot of headache in the long run. Step 3: Paying Owners Enter what you owe the owners as a bill minus your property management

QuickBooks for Property Management – Owners

As many of us know, there are several schools of thought on the best processes for any business when using QuickBooks. Property Management is no different. In this series you have learned about using classes and the best practices for setting up a class as well as how to set up your tenants. Like these two sections,  setting up owners also comes in several methods. The method I practice is to use the Vendor Center in QuickBooks. Why setup an owner as a vendor when they are your customer? The reason for this is simply because getting their rents to them is a liability to the property management firm just as a bill for utilities is. It also makes your workflow smoother. We will get more into workflows under this method of property management in a later post for now let’s continue discussing setting up owners. There are two ways that owners can be listed as vendors. One way is to use the “address first owner name” method that is similar to setting up a tenant. This way works well for owners with only one property. The other is  using the owner name for those with multiple properties. Using the

QuickBooks for Property Management – Tenants

To continue on from our previous post, QuickBooks is an excellent tool for property management. In this post, I am going to cover Tenants and how to treat them in QuickBooks in a way that is easy for anyone to understand. My recommendation is to set each tenant up as a customer. Inputting an abbreviated version of the street address along with the tenant’s last name will help keep identical records separate and sorts the list by address; making it easier to locate a property. Once a tenant has moved and their record has been reconciled (move out process complete and security deposit returned) that tenant simply becomes inactive, and a vacancy is entered using the same format stated above. For example: Tenant is Bob Hall. Address is 1455 Main Ave. This tenant would be setup like this: 1455Main<Hall>. A vacancy after the tenant has moved out would look like this: 1455Main<Vacant>. Using this method comes in handy when you have multiple properties by the same owner and then multiple tenants in that property. This method also makes it much easier to determine the number of vacancies an owner has at any given time as they will be listed along

QuickBooks for Property Management- Classes

Property Management is a unique sector of business and the bookkeeping for it is as well. One of the best ways to manage the books for a Property Management Firm or individual landlord is to use the Classes feature in QuickBooks. Classes is a feature that can give further detail on a business’ financial information. There are several ways that a Property Management Firm can use Classes: Owners As Classes Property As Classes Separate Business Entities as Classes The best practice in choosing which way to use Classes is to determine what type of information you want to track. For a property management firm this means tracking income and expenses for each owners’ property. Setting the owner as a class is the best way to tie the income and expenses to each property; especially if an owner has more than one property. If this is the case, each property held by the same owner can be entered as a subclass of that owner. Utilizing Classes this way makes tax preparation faster and simpler. The IRS requires all income and expenses on rental property to be separated by location on the Schedule E. Whether you use QuickBooks Online or QuickBooks Desktop,

QuickBooks for Property Management – Work Orders

Maintenance requests. YIKES! For most landlords and property managers this can be a MAJOR headache. Establishing a smooth, easy to follow process from the beginning can fulfill a request with ease! Once a maintenance request is received, the landlord  or property manager completes a Work Order. There are many steps but like all things, repetition is key to automating this process. The first step in this process is when the Tenant issues a maintenance request. Depending on how you manage your properties (self-managed or property management firm), the response to this will vary a little bit. For the post we will outline if from the property management firm view. More often than not, PM firms have a maintenance team on staff that is ready to answer these requests in a timely manner. Others do not and may have to call upon another company to help. In either situation, a well-defined process will ensure a smoother journey from start to finish. Here is the process AMH recommends: Tenant issues a request. PM sends request to Maintenance Supervisor. Supervisor contacts tenant for further info and to schedule time for Technician to inspect the issue. Technician inspects issues, taking pictures and documenting findings.

Employee Onboarding

Just like with new clients, you must onboard your new employees as well. Reading a job description and explaining the job duties to the new employee is not always efficient in acclimating the new hire. Aside from explaining the duties and assigning them a work area, there are quite a few things that can be done to ease the transition for your new team member. 1. Walk them through accessing their company email. – I know it sounds trivial but this can be so frustrating some times. Walking him or her through this step will help ease some of the nervousness from their minds. 2. Sit with them and give them a short tutorial on any software you use to run your business. – Most people are not up on the latest software or applications so learning a new program is stressful! Trying to navigate it alone!? YIKES! Giving your new hire a hands on tutorial shows them that you understand that learning a new program is difficult and that you value their presence. Yes, I know you can point them to YouTube but your sitting down with them will go a long way to instilling loyalty and a sense

New SBOs & Bookkeeping

Congratulations on starting your new business venture! It is challenging and rewarding and no day is the same. The key to making it all work is to automate and delegate when and where you can. One of the best things to both automate AND delegate is your bookkeeping. Starting your business with good bookkeeping practices early, will take a large load off your plate down the road. It is easier to catch mistakes in the beginning than it is to catch them in the end. These mistakes can be extremely costly and come with other consequences such as jail time or seized property if not caught and corrected in time. Do not be worried about having the money to pay for a professional regularly. My recommendation is to find a professional that understands your industry first. Be intentional. The goal is to find YOUR bookkeeper/accountant. Explain to them what you are looking for and what you need starting out and sign on to work with them. For example: You are starting an Etsy store and you have some inventory just recently purchased for the products you make. What you need: A bookkeeper/accountant who understands e-commerce, particularly the Etsy space and

Financial Statements: More than just a P & L.

Profit. This is the buzzword that drives businesses today. How PROFITable were we? Yes, but what was the PROFIT margin? Of course profit is important. If a business is not profitable, it will not survive. One way that most companies find out their profitability is with a Profit and Loss Statement or an Income Statement. This document totals all income streams a business has and subtracts out all of its expenses to get was is called a Net Income if the income is more than the expenses or a Net Loss if the reverse is true. It does not take into account any outstanding liabilities the company has and this is one of the reasons why it should not be the primary focus when it comes to your financial statements. To better gauge the financial fitness of your business there are some other financial reports you should add to your monthly statement review. Balance Sheet – The reason it is imperative to review this document is because this is where you will find accumulated depreciation and liability errors. Statement of Cashflows – This shows you how your money moves. Reviewing this document frequently will help your company prepare for the

Leases: Why They are Important

I am sure this is common place but believe it or not there are still landlords operating without a lease agreement. What is a lease agreement? A lease agreement is a document that outlines who is living in the rental unit, how much the rent is, when it is due, and the rules regarding the use of the unit. In addition, the lease agreement details what the deposit is, what utilities will be paid by the owner and the renter, how to send maintenance requests, and how to give notice when moving before the lease is up. This document is important because it lets the tenant know what to expect, how they are to maintain the property, and what happens if the rent is late. It serves as a layer of protection for both the tenant and the owner. Aside from telling the tenant how he or she must behave while occupying the unit, it details how the landlord is to behave while the tenant is in occupancy. The landlord is to provide the tenant with notice 24 hours prior to entering the unit for non-emergencies, how to handle the security deposit after the lease has ended or tenant has