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
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
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
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
As a bookkeeper, one common issue that I see with small business owners is the commingling of personal and business funds. It usually begins as a small purchase being made for the business accidentally with personal funds or vice versa. This is not a big deal if it is a one-time thing. When it becomes common place, larger issues can arise and the following questions need to be answered: For those personal purchases made using the business funds, are they being paid back to the business? Is the business paying the owner back for expenses made using personal funds? Are those business expenses that were made via personal funds being treated as an equity investment instead? Are the personal expenses paid for by business funds being treated as an owner draw? How will they affect the business and personal tax deductions? Aside from answering the above questions, deciphering what was a personal expense and what was a business expense so that your business receives optimal tax deductions and credits is CRITICAL. The time it takes your CPA or EA to do this can cost you thousands. In situations like these, having a bookkeeper handle your day to day financial data
Receipts!!! Those pesky receipts!!! They are everywhere and then when you need one, you can’t find the little bugger. You do your best to keep them in a shoe box or manila folder but they do escape lol. You ask yourself “Why do I have to keep these? We never get audited.” I can tell you why. When you make a purchase, whether it is with cash, a check, a debit or credit card, you are given a receipt. This is an ITEMIZED listing of the good and services you purchased. This listing WILL NOT show up on your bank statement and therefore, that little piece of paper has just become an important financial document for your business. To illustrate why it is so important, imagine the following scenario: You are in an office supply store. There you purchase the following: 2 – 10 pack reams of paper 3 – CMYB Toners for your Printer 10 – 12 Tul Pens A car phone charger Earbuds 2 – 20 oz Mountain Dews All totaling $345 (estimating for the scenario). This includes Sales Tax. Imagine you have just now tossed this receipt. It is not month end and you are downloading your
One of the most recurring themes I have noticed as a bookkeeper is most business owners have not reconciled their bank or credit card accounts. I think this is due to the fact that some of them may not understand how powerful a simple task like this is AND how much information it can tell them about their businesses. Here are 7 reasons why this task is so crucial to the overall financial health of your business. Errors – Performing a reconciliation of your bank accounts every month can help locate errors made by you or the bank. Not to mention can catch illicit transfers performed within your accounts. This is especially essential if you have set up bank feeds in your accounting software. Prevention – Unauthorized charges by the bank, check fraud, and other serious issues can be identified AND corrected. Miscellaneous charges and large, out of the ordinary purchases are some prime examples. Powerful Decision Making – When you know where your money is coming from and where it is going, when you know all transactions are accurate and that balances are correct, you as the owner can make some very powerful decisions in regards to your company.
Setting up bank feeds within your accounting software is a huge time saver if you are making hundreds of transactions per month. Particularly if the rules to code them are accurate and all data comes across as it should. Right? For the purpose of this post I will refer to the accounting program I use, QuickBooks Desktop Accountant and how bank feeds work within the program. Bank feeds for those doing LESS than 100 transactions per month is more time consuming than to simply enter the transactions by hand and I will give you my whys. More often than not, the transactions that are downloaded are not properly coded to the income or expense accounts. Which brings me to my next point. The rules needed to ensure proper coding are, more often than not, created incorrectly. They create numerous entries into the “Other Names” list in QuickBooks for example; creating another task of cleaning up this list. In QuickBooks desktop they are imported and treated as if they are already reconciled. WHAT? Now they have to be cleared and properly reconciled depending on the frequency of reconciliations. It may take a long while before and error is caught and the