How to receive rent in QuickBooks

Question

I always used "Make Deposits" or "Create Invoices" to receive rent in QuickBooks, and it was all good. Now, for the reason I don't understand, when I create a report called "Transaction Detail by Account," (which is one of the standard reports,) the class, (which I use to distinguish different properties,) don't show up when I use "Make Deposits" or "Create Invoices." Which means I won't be able to make a report by class. I can solve this problem by using "Sales Receipt" to receive rent. Any red flag using sales receipt for rent? Thanks!

Soh Tanaka · Answer

@Markus Shobe I see what you did with your report. You used Accrual based report while I was using Cash based report. It's possible I'm not fully understanding what you are explaining, but I wasn't able to accomplish what I was trying to accomplish, so I'll just use "Enter Sales Receipts" to receive rents. This will create a clean easy-to-read report that I can easily compare with the report from the property management companies. Thank you, anyway!

Soh Tanaka · Answer

@Dan V. "Owner distribution from PM should be recorded as a check/expenses in the Funds Held by PM register..."

My "Funds Held by PM" account is an asset account (like an escrow/security deposit account,) not a bank account, so I can not use a check/expense. I just use "Make Deposits" from "Funds Held by PM" to my bank account. I can filter by class. Form some strange reason however, when I deposit rent, the class will not show up in the "Transaction Detail by Account" report.

As you mentioned, creating invoices and receive payments will make it easier to see who paid/hasn't paid rent. However, I can't use it as the class will not show up when I run my report, "Transaction Detail by Account." I have to use this report (as far as I know) to see the owner draw. Entering rent using "Enter Sales Receipts" seems to work the best (except it's a little harder to see who has not paid.)

Thank you for your response!

Markus Shobe · Answer

@Soh Tanaka Yes, I have received the payment. The invoice is what will drive the class. Once you receive the payment, you have to make the deposit. So in your example you would receive the $1,000 payment and then go to record deposit. You would record the $1,000 as a deposit and then the make deposit screen would show up. The $1,000 would already show up under make deposit, so you would just have to enter in the management expense and owner's draw as negative. On the make deposit screen you will see the class feature on there. I hope that clarifies a bit.

Dan V. · Answer

@Soh Tanaka Quickbooks has issues in tracking transactions by class especially for bank accounts, that's why it's not recommended to use the details of Funds Held by PM account when you review transactions by class. The only way you can get an accurate report by class if when you book everything using a journal entry which is not advisable either.

Owner distribution from PM should be recorded as a check/expenses in the Funds Held by PM register payable to your name or LLC name, categorized as Undeposited Funds (then process bank deposit) or directly categorized to Checking account (where the fund is deposited to). It depends on whatever you trying to accomplish, but if your books and process are set up properly, you should be able to run report that will show you the info you're looking for.

As far as the different ways to process the revenue, creating an invoice and processing a payment will track (show in the customer transaction details) which customer paid and who hasn't and when you run P&L report in accrual, income will be recognized at the date of the invoice, cash basis recognized at the date of payment. Sales receipt will track (show in the customer transaction details)customer who paid but not those who don't, P&L report using accrual and cash basis will show the same result. Bank register deposit method will not show transaction in the customer transaction details, P&L report using accrual & cash will show the same result. I highly recommend the invoice method.

But as Natalie said, this kind of issue is better discussed live with the professional that can review your set up and accounting process and at the same time help you navigate through the reports available that will show you the information you need. Good luck!

Soh Tanaka · Answer

@Markus Shobe Thank you for making the sample file. I see the invoice, but have you received the payment? Basically I have an account that shows my property management company collecting +$1,000 rent income, charging -$100 management expense, and sending -$900 owner draw to me, so the balance is $0. Your sample shows the balance as $0, even though nothing got taken out from it (no owner draw.)

Markus Shobe · Answer

@Soh Tanaka here is a screenshot. I created a new QB file and created an invoice and created a sales receipt. As you can see they both have information under class.

Markus Shobe · Answer

@Soh Tanaka there is something that you are missing. If every invoice has a class associated with it then the class would show up on all reports. I have never had this problem before. Creating an invoice and creating a sales receipt are not that different, that's how I know something is not being done right by the sales receipt showing up correctly but when creating an invoice it creates problems. I would reach out to someone at Quickbooks or someone on BP.

Soh Tanaka · Answer

FYI, I am using QB Desktop version.

Thank you, @Justin Tahilramani. I do use one class per property. I have an account that is called "fund held by PM." Basically all the transactions my property manager (PM) is doing will show up there. Every month, the balance will come out from the account and PM will deposit into my account, and I call that "owner draw." If I use P&L report, the owner draw doesn't show up, so P&L report will just show money accumulating in the account, and never going down. This makes it harder to reconcile what is actually happening and my QB.

@Markus Shobe. Actually you can NOT run some of the reports by class if you use deposit rents using "Make Deposits" or by using an invoice.

Go to Reports > Accountant & Taxes > Transaction Detail by Account, then try to filter by class, it won't work. For some reason I don't understand, there is no class associated with transactions done by "Make Deposits" or invoices, so when you try to filter by class, all the income will disappear from the report. Only when you use "Enter Sales Receipts" to deposits rent, the class will show up. I don't know why, but that's just how QB is set up.

Markus Shobe · Answer

@Soh Tanaka there is no red flag for using sales receipt. When you create invoices there will be a class tab on there, so you can run any reports you want to by class.

Justin Tahilramani · Answer

I have always created invoices to receive rents in QB Online. Are you separating your assets (homes) by class? If so, you should be able to run a simple P&L report and filer by class (property).