Learn how to record transactions for rental properties you manage and for your own management company in QuickBooks Desktop.
As a property manager, you provide service to property owners and the tenants of those properties. In such a case, you need to create and manage two company files:
- Rental property company. You collect rent, pay bills, and manage the property for an owner.
- Property management company. This is your own company where you receive income for managing properties.
Using these two company files, you can keep the companies’ transactions separate from each other. We’ll show you how.
| Do you want to manage the two company files at the same time? If you use Pro or Premier, you can upgrade your QuickBooks Desktop once you’re ready to manage the rental property and property management files simultaneously. |
Note: Not sure what accounts to use, or how to record the transactions? Consult your accountant. If you don’t have an accountant, we can help find one near you.
Create a company file for rental property company
In this company file, you keep track of the transactions for each property you manage. This is where you record the rent income and expenses.
How to Record transactions for a Property Management Company
Step 1: Set up tenants and vendors
If you haven’t already, set up the customers and vendors:
| Properties you manage | Customers |
| Tenants | Customer: jobs of properties |
| Owners of the properties | Vendors |
| Your own property management company | Your own property management company |
Note: You can set up property owners as vendors since you pay them their property’s net income.
Step 2: Set up accounts and items
Before you record any transaction, you need to set up accounts and service items you use. Here are some you can set up:
| Accounts |
| 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 |
| Tenant security deposits | Liability: Security deposits |
| Rent | Income: Rent income |
| Property management fee | Expense: Property management expense |
Do you manage commercial properties?
You can also set up an income account and service item if you charge tenants for common area maintenance expenses (CAM). This helps you track CAM income separate from the other fees you charge.
Step 3: Record security deposits
Most property owners ask for a security deposit from their tenants at the beginning of a rent period. This is the rental company’s liability since you might return all or some of the amount at the end of the period.
You can use a liability account, such as Security Deposit, to track each tenants’ deposit.
- Go to the Banking menu, then select Make deposits.
- In the Received From column ▼ dropdown, select the tenant.
- In the From account ▼ dropdown, select the security deposit account you set up.
- Enter the amount, then select Save & Close.
Step 4: Track the rent income
You can record rent from your tenants in two ways. It depends on when you receive the actual rent payment.
- Record the rent income from each tenant:
- as invoices if you receive payments at a later date.
- as sales receipts if you receive their payments right away.
- Make sure to select the tenant and the item you set up in “Step 1” and “Step 2.”
How do I charge late fees?
Tenants sometimes make late payments. You can use QuickBooks’ finance charge feature to calculate and add the late fees to their invoices.
Step 5: Record expenses for each property
You also need to keep track of the expenses. These include property expenses and the property management fee.
Property expenses
These are expenses to maintain the property, such as utilities and repairs.
- Record the expenses based on when you pay them:
- As bills if you pay them at a later date.
- As checks if you pay your vendors right away.
- From the Customer: Job ▼ dropdown, select the property or tenant.
Property management fee
The property management fee depends on your agreement with each property owner. If you base it on a property’s gross or net income, you can use a profit and loss report to calculate the fee.
You can record the property management fee as a bill or a check. Make sure to select the property or tenant from the Customer: Job ▼ dropdown.
How do I charge an expense to a tenant?
When a tenant damages the property or asks you to have some work done, you charge the expense on their account instead of the owner. You call these costs “billable expenses.”
When it’s time to charge the tenant, you add these additional expenses to their invoice or sales receipt.
- Record the expense as a bill or check.
- From the Customer:Job ▼ dropdown, select the tenant.
- In the Billable column, select the checkbox.
- Once you create an invoice or a sales receipt, add the billable costs.
Step 6: Pay the property owners
Once you record all the properties’ income and expenses, you can now check how much is due to each property owner.
Note: You can use a profit and loss report to check or calculate how much to transfer to the property owners’ account.
- Write a check for the payment.
- Make sure to select the property owner you set up in “Step 1.”
- From the Account column ▼ dropdown, select the owner payment account you set up in “Step 2.”
- Run a profit and loss report to check the net income for each property. If the property owner chooses 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 the property management company file, you track your own business’ transactions. This is where you record your income and expenses for managing properties.
Step 1: Set up property owners as customers
If you haven’t already,
set up property owners as customers
Step 2: Set up accounts and items
Set up accounts and service items so you can easily record transactions. Here are some you can set up:
| Accounts |
| Account type | Account name |
| Asset | Checking account, furniture and equipment |
| Liability | Payroll liabilities |
| Income | Property management income |
| Expenses | Insurance expense, utilities expense |
| Service Items |
| Item name | Linked account |
| Property management | Income: Property management income |
| Utilities | Expense: Utilities expense |
Step 3: Record property management income
You can record income from property owners in two ways. It depends on when you receive the actual payment.
- Record the management income from property owners:
- as invoices if you receive payments at a later date.
- as sales receipts if you receive their payments right away
- Make sure to select the tenant and the service item you set up in “Step 1” and “Step 2.”
- Enter the amount you receive from property owners. This amount is what you calculate for in “Step 4” from “Company file 1: Rental property company.”
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