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, the Classes feature keeps the books looking much cleaner, particularly the Chart of Accounts, and makes creating the tax crucial reports easier; saving hundreds and thousands in tax prep fees.