Quickbooks for owner rental properties
Use an INVOICE to bill your tenants for rent. (Invoices show up as income) If you don't use an Invoice, then that bill shows up as an Accounts Receivable Account.) You want to be able to use your Profit and Loss Report by Class, which shows your income less expenses, therefore you need to Invoice your Tenants. (Or your Profit and Loss Report General)
You are responsible for your own payments to your mortgage company. Don't rely on payments from your tenants, you may be waiting a long time. Keep your credit in good shape by paying your mortgage yourself. You do that by setting up your Mortgage Company as a Vendor and then writing a check to the Vendor (or enter a bill for the vendor and pay later)
On the stub of your check assign each charge as it states on your statement. Therefore, Principle: $350.00, Interest $500.00, PMI $150.00, etc., These Charges must be linked to your Chart of Accounts.
Link all income and all expenses to the property in the Class Feature.
Nancy Neville
I’m setting up quickbooks and trying to figure out how to record a few things. -Rent do I set the up as a bill or invoice? -
It's the best practice to create an invoice for the rent, for better tracking, 1) it will show in the customer's account and; 2) to keep track of any unpaid rents.
when the renter does not pay so I have to pay to cover the mortgage payment how do I record my payment? I read you list it as owner contribution or something like that (how do I set that up) -when I pay the mortgage do I need to separate how the payment post? Example Principle, interest, escrow, etc...
Regardless of whether the tenant pays the rent or not, you will still need to pay your mortgage, and yes, you will need to break the payments down into principal (liability), interest (expense), escrow (bank or other asset), etc. as these have different accounting and tax treatments. The other side of the entry depends on how you paid for it. If you paid the mortgage from the business bank account (assuming your property is under an LLC), then you will record the payment as "check" or "expense" transaction. If you paid the mortgage using an account not set up in Quickbooks (ie. personal account) then you will book the transaction as journal entry debit to principal, interest, escrow accounts, and credit to owner's contribution (equity) account.
-when I have bills and repairs for an apartment how do I show the payment is for that appointment, when I enter them now it only allows to to select the address of the building in the class.
That's the purpose of Class tracking. Setup each property as a Class and assign the property/class to each transaction. If you would like to find out how each property is doing, you can run a Profit & Loss by Class and it should show you the breakdown.
Even if you are planning to handle the bookkeeping yourself, I still recommend reaching out to your accountant to help you at least set up your books and accounting process. It will cost you in the beginning but it will save you in the long run (an ounce of prevention, worth pound of cure!). Good luck!
Gary Sowell:
whenever you deposit money into your business account out of your own pocket, it is called an Investment and Draw Equity Account, in your Chart of Accounts.
When you make up a deposit in Quickbooks you will link that payment into your Business Account to the Owners Investments and Draw Equity Account in your Chart of Accounts.
If you are paying yourself back this way, and not the Reimbursable Billing way that is what I recommend, then you would write a check to yourself or cash and link it to the Owners Investments and draws account.
Nancy Neville
Also your Customer Center should look like this
The Classes should look like this.
You will link your expenses to the unit inside the apartment if it belongs to a tenant of that apartment.
If the expense belongs to the building you will link it to the building. Thus, the Headers.
Nancy Neville
@Gary Sowell What version of Quickbooks are you using, online or desktop?
@Nancy Neville Thank you I need to look deeper into my chart of accounts. I might have to add some. I have what came with the product. I will try this this afternoon.
@Nancy Neville I think I fixed this now, I ran a detailed report on an apartment number but it would only show the total for the building (address) went back into the setup and made a change now it shows at the apartment level also.
@Dan V. I have quickbooks pro online.
I was not sure about online or desktop.
@Nancy Neville I just finished entering a few months. My goal is to have 2018 completed in QB by the end of year.
With owner investment, prior to me opening my business account I wrote checks or used my credit card for two months for bills and paying the attorney to setup my LLC. How do I show the payments. I went into the chart of accounts and can't figure out how to add this.
Thank you.
I also started reading your page, lots of good information on it.
Gary Sowell: It really isn't a good thing for anyone to try and enter in an entire years worth of data into any software program that one has just purchased and have it all come out 100% correct within a few days in order for it to be ready for January 1st.
It's best just to give your CPA whatever you have, either from a previous software program you used, or from your shoe box and begin fresh using your NEW SOFTWARE PROGRAM, which I hope is QuickBooks.
However, I would say 99% of people don't heed this advice and still try to enter in everything for the year at the last moment, and I'm sure they wished they hadn't in the long run. Because what you do now, and what you don't know, will affect your accounts from this day forward. If they are wrong, you will be wrong forever.
If you insist on doing it this way, you need to find a room in your house or office, lock the doors, turn off your phones, keep the kids from crying outside your door, and then FOCUS FOCUS FOCUS, on entering every transaction you ever did from January 1, 2018 to the day you begin USING QUICKBOOKS, which is probably today.
Not only are you trying to enter all this data at the last moment, but you want to know how to do it which means you want to learn how to use QuickBooks. You would have to learn how to use QuickBooks in order to do it today!
And, as much as I would love to help you out and give you all this advice, it's impossible for me to do that in a post. It would take a book for me to tell you how to do all this, and even then it will take you time to setup everything and enter everything.
My recommendation is to just give your accountant what you have, and begin using QuickBooks January 1, 2019.
I wish I could help you more, but there is too much information I would have to explain to you in order to answer your questions.
Nancy Neville
@Nancy Neville thank you again. I gave my accountant my updated spreadsheets every month. He’s the one that recommended I enter everything I could prior to me seeing him in January. I have a lot of the same recurring bills and I keep track of my vendor invoices and payments very close because one day I notice for the same service they charged me different.
I have all the bills entered and payments matching from the banking download.
I was just stuck on how to apply the mortgage payment I was trying to figure out how to list the principal,interest, etc.. so it will show in the reports correctly.
I agree I have a lot more to learn.
You need to setup your property as a Long Term Liability Account In your Chart of Accounts.
When you write a check to your Mortgage Company you will link the Principle to the rental in your Chart of Accounts Long Term Liability.
The rest of the chargers are enter in as regular Expenses Accounts in your Chart Accounts.
Nancy Neville
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#1 Tax, SDIRAs & Cost Segregation Contributor
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I'm excited to see @Account Closed giving the same advice that I give my clients: do NOT try to enter the last year in QB, start fresh from Jan 1 forward. And, like Nancy said, few people accept this advice.
Where we're slightly different is that I recommend using QuickBooks Online, not the conventional desktop version.
Originally posted by @Gary Sowell:
With owner investment, prior to me opening my business account I wrote checks or used my credit card for two months for bills and paying the attorney to setup my LLC. How do I show the payments. I went into the chart of accounts and can't figure out how to add this.
These are considered owner contributions, enter them using journal entry debit expense account(s), credit Owner's contribution account.
Depending on what your entity is that is the way you should create money deposited in and out of your account.
It can either be loan or equity.
Please, no more journal entry. Do you want to learn Debits and Credits? Except for year-end depreciation.
@Nancy Neville Thank you all of this helped plus I quickbooks sent me an excel file of list accounts. I’m still struggling with journal enters for the mortgage payment when I’m making the payment for a bad renter that has not paid.