Our family here in the Kansas City metro just formed an LLC to purchase a vacation rental property (3BR, 3BA condo) in a Colorado resort area. For at least the immediate term, we will continue using the incumbent property management company; thankfully, there are a number of established contenders in the area. Meanwhile I have been assigned the task of bookkeeper and I would greatly appreciate any suggestions any of you might pass along.
I signed up for a 30-day trial of the web-based accounting package Xero, which I know has far greater capability than I need. However if it helps me record the basic transactions that will drive the required quarterly reports for the family and for our tax accountant, then it doesn't matter if I'm not using all its features.
What I would really appreciate from any of you would be one or more recommendations of sources for best practices for those in my situation. Product tutorials would be helpful but so too would be any overviews in the broader context of tracking finances associated with a vacation rental property. Many thanks in advance,
Bruce Wofford, Lenexa, Kansas
For a single family vacation rental I think that software is overkill. There are a couple of excel files up in the fileplace like this one (https://www.biggerpockets.com/files/user/brandonatbp/file/basic-rental-property-income-exspense-tracker) that would work well for your situation.
I agree with Tim. More important than the type of system you use is your commitment to use it regularly. As long as you update an Excel spreadsheet regularly, it will provide you and your accountant with all the information that you need.
I agree with Tim. That software is overkill. I have 22 STRs. My wife and I do the book keeping. I have a dead tree calendar where I write down the rent collected each day. At the end of the week I total the amount collected for the 7 days. At the end of the month I total all the weeks. At the end of the year I total all the months and use that number for my taxes.
My wife does all the expenses in a spreadsheet. The 3 categories are utilities, supplies, repairs & maintenance. There is also depreciation, but we let the accountant figure that out. It's simpler than it sounds.
Now if you were running a petrochemical factory, an amusement park, or a grocery store; then I can see the necessity of software.
The accounting for a STR shouldn't be much more complicated than the accounting for a lemonade stand or a garage sale.
Hey @Bruce Wofford shouldn't your property management company keep track of your books? If I'm misunderstanding or you want to audit your PM companies revenue reporting, I tend to disagree with some of the others if your rental is taking bookings across multiple platforms (Airbnb, VRBO, Booking.com, direct booking, etc). I use Tokeet to manage my 10+ listings but would still consider it even if I only had 1. Why? Its free and for the upgrade plan is only $7/mo. It generates very cool revenue reports and separates everything by channel so you can see where most of your bookings are coming from, and also allows you to audit your PM company. It also tracks profit/loss if you enter your expenses every month and want to get fancy with it. Hope this helps!
In general, Quickbooks (which is around $7/month) or Mint (totally free), can also help you track these costs. They aren't set up specifically for short or medium term rentals, but they can be easily modified to track your expenses. Good luck.
We use Wave Accounting (Waveapps) to track expenses and income for our vacation rentals. It's easy to use and cloud based to we have access to it just about anywhere on any device. The great thing is it's free! I like it and it's easy to update and produce monthly reports to use for our monthly taxes and end of year taxes.
However, as others have stated, it doesn't need to be complicated and can be as simple as using a spreadsheet as long as you update it regularly.
Hey, I'm with Jeremy here. Wave apps is great for small businesses! But if your business is a bit bigger Wave may be too limited to you. In that case, I'd recommend using Zoho Books.
I hope this helps! :)
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