Property Management Using QuickBooks®
In using QuickBooks® for their purposes, providers of property management services will be very interested in accounting for cash flows relating to their clients’ commercial and residential properties. To account for these funds, property managers will maintain accounting records for their management fees or commissions receivable, rent received from tenants, disbursements relating to the properties and all other applicable transactions. Disbursements may be for management fees, commissions, maintenance charges and capital expenditure. In most instances, rent is received from tenants every month; other tenants pay quarterly, semi-annually or annually. However the tenants pay, property managers – particularly of multiple locations – receive many payments periodically. To account for these receipts – and subsequent disbursements from these receipts – property managers will find QuickBooks® accounting solutions to be very useful tools.
Developed by Intuit, QuickBooks® software accounting packages have a reputation for being user-friendly. Besides, they are easily customizable to the accounting and general information needs of organizations in QuickBooks® target market. Like most accounting software packages, QuickBooks® accounting products have inbuilt charts of account for numerous business entities within diverse industries. Consequently, there is no insurmountable difficulty in applying QuickBooks® accounting solutions to property management transactions.
QuickBooks® Online is a particularly useful accounting solution for property managers who retain employees and contractors to manage numerous properties owned by individuals and investment groups. In this context, QuickBooks® Online advantageously permits the establishment of online centralized accounting systems that serve the authorized personnel. The advantages derive from this software’s ready accessibility, via the Internet, irrespective of the geographical location of the authorized users. QuickBooks® Online expedites the recording of accounting transactions, the routine generation of accounting documents and the periodic preparation of financial and other related statements.
On its website at http://support.quickbooks.intuit.com/support/articles/HOW13259, Intuit presents hyperlinks with very detailed information regarding the use of QuickBooks® to account for property management transactions. Exhibit 1, on Page 3, is from the cited website; it shows hyper linked options that users of QuickBooks® may utilize in establishing and administering property management companies. The instructions include the recommendation that property managers each set up two companies in QuickBooks®, in order to account for their business activities: one company for the rental of clients’ properties and the second company for the management of those properties.
Using the companies that account for rent received for clients, property managers would account for security deposits, rent received, pass-through expenses relating to tenants, maintenance and repairs. By means of the companies created solely for property management purposes, the property managers may retain and account for their commissions deductible from the clients’ rent receipts. In heeding Intuit’s recommendation to establish two companies each, the property managers will separate their business operations from the business they conduct for their clients.
Besides guiding property managers concerning the establishment of their companies in QuickBooks®, the hyperlinks in Exhibit 1 document comprehensive procedures for optimizing the use of the newly created companies’ accounting capabilities. These procedures include the accounting treatment of transactions relating to clients, tenants and the properties.