Below is an unedited excerpt of Chapter 1 of our training guide for landlords to use QuickBooks. If you like what you see, you can order risk free and download everything immediately. Want a hassle free refund? Ask us for your money back within 30 days.
Chapter 1. Introduction
The actual book is in PDF format and comes along with a sample company file and a template data file. You can print the eBook, no restrictions.
1.01 Who Should Read This Book ↑
This book is designed for people involved in the purchase, management, and tracking of rental homes or apartments. It is my hope that this book will aid you in your understanding and application of QuickBooks for a real estate investment company. Other individuals such as property managers, commercial landlords, or developers have found this book helpful too. I appreciate your feedback and success stories as your read this over. Share successes at LandlordAccounting.com/your-story.
You will understand how a real estate rental business works and the associated terminology. Ideally you already either have your own corporate entity, or are in the process of forming one. It is essential for you to have a strong understanding of the financials of your company, even if you hire a bookkeeper. We’ll help you learn those. Use QuickBooks to enter data properly, and you will be able to analyze your business, make decisions using accurate financials, and save an enormous amount of time.
I recommend starting at the beginning to understand the underlying accounting principles. This applies if you plan to enter the bookkeeping data yourself, hire a third party, or train an employee to do it. You will learn common bookkeeping activities a landlord will encounter while dealing with properties, tenants, and sorting out financing.
1.02 What this Book Is ↑
This manual is an education tool to bring anyone involved in the residential real estate rental market up to speed to manage the bookkeeping and property management using QuickBooks. The basic concepts and terminology will still apply to older or newer versions.
Throughout this book I will use a sample data file of an LLC. Your entity, state laws and individual needs may differ. Get a competent accountant and attorney and go over what you do in QuickBooks.
Large public corporations keep two sets of accounting books: one for tax purposes, and the other for management decision making and analysis purposes. This manual assumes you keep one set of books and use one QuickBooks file.
1.03 What this Book Is Not ↑
This manual is not a replacement for your accountant. There are nearly 10,000 pages of tax law which change yearly. Please interview many accountants and choose a competent one with extensive experience with QuickBooks and real estate business owners like yourself. When you’re ready to implement QuickBooks for your property management, make sure your accountant supports you and is familiar with the program. Most who deal with small businesses are, and may even offer you a discount for using QuickBooks.
This manual is not a replacement for your attorney. Consult your attorney. Do not consider anything in here legal advice.
1.04 When is a Good Time to Read and Implement this? ↑
Read now! Implement slowly. Commit to reading this every day and playing with QuickBooks until you master it and are ready to try it on your own company. I invite you to visit the free forums at www.LandlordAccounting.com/forum on a regular basis to ask questions and strengthen your knowledge by helping answer other people’s questions.
It is suggested to not try this on your own “real” books at first. Instead enter transactions that are similar to what you would incur in your company. Then try generating the reports you need and have your accountant look it over. Start using QuickBooks exclusively when he or she approves your setup.
Like what you’re reading? Order our full training today for the 200+ page ebook and QuickBooks data files.
1.05 How this Manual is Designed ↑
I have been an investor, landlord, consultant, and business owner. I firmly believe in the importance of understanding the financial health of one’s companies. Some investors just want to make the next investment, and they insufficiently manage, optimize and track what they already have. Through this book and the accompanying company files, you will enter property, tenant and management company transactions, automatically track tenants’ late fees, understand your business’ financial health, and save time.
Information that you type appears in this special typeface. If you need to press a special key sequence, such as the “Control” key and the “A” key, I will write it like:
Ctrl+A. I put QuickBooks specific terms in “quotations.”
When you need to click a link or a menu item on the screen those will be bold. For example, to open a company file in QuickBooks, click File > Open Company….
If a new term is introduced, I use a definition box like the following:
As you read you will have questions, I try to answer them all here in FAQ’s. If I don’t answer your question, don’t hesitate to search the forum at www.LandlordAccounting.com – someone else probably had the same question and it was answered.
Sometimes something tricky comes up; if that’s the case, take careful note of our Quick Tips:
There will be times that you need to use extra care, we will highlight these moments with a caution.
When a related topic is relevant to current discussions, the See Also box will refer you to these other topics.
From time to time there will be additional information that does not merit inclusion in the main text area, but some people will enjoy reading it. A sidebar will pop up on the side and delve into more details.
1.06 QuickBooks is not Quicken ↑
Quicken is a personal finance product for individuals. It uses single entry accounting. Amounts are usually recorded in column form, like a checkbook register. Entries include the transaction’s date, a memo, and the amount of money involved.
QuickBooks is an accounting solution for small businesses. It uses double entry accounting. Each entry has two accounts (sometimes more with “splits”) associated with it. In the simplest case this means one account is where the money came from, and the other explains how it was spent. For instance, you use cash to buy a new property. The two accounts involved are cash and a fixed asset account for the property. Money came from the cash account and it went to the new asset. Details on double entry accounting appear next chapter. QuickBooks makes it easy and once you understand it, you will be grateful of double entry’s power.
Businesses need more detailed financial reporting than individuals. QuickBooks transactions are recorded on a dual impact on the financial position (change to balance sheet) or operating results (change to income statement) or both. You cannot deposit money from a security deposit into a checking account (increasing an asset on the balance sheet) and stop there. You also need to recognize that you owe this back to the renter (and add a liability on the balance sheet).
QuickBooks has fields to collect information about your tenants, services, vendors, inventory, late fees, etc. You can invoice your tenants, track accounts payable and rent receivable, make journal entries, create advanced reports and more in QuickBooks. Many of these functions are not available in Quicken.
When you start to use QuickBooks for your business, it should have no relationship to your personal finances. If you commingle the two, you may have serious consequences with the law or tax authorities. It is essential to keep separate personal and corporate finances. If you are migrating records from Quicken to QuickBooks, refer to the integrated help on this topic in both programs.
1.07 QuickBooks is not Quicken Rental Property Manager ↑
Many of my customers have first tried to use Quicken Rental Property Manager; however it did not work out well for them. Because it is designed to be so “simple” many real business scenarios just aren’t supported. QuickBooks’s is still our best bet. Here is what some of my customers had to say.
Note: I recommend you use QuickBooks, not Quicken Rental Property Manager. Below are complaints of people who tried to use Rental Property Manager. (Later they were delighted once hey started using our training – testimonials ♥).
“I tried the Quicken PM [Rental Property Manager] – very busy and very non- intuitive.” – C.B.
“We are presently using Quicken Rental Property Manager 2.0. It is an entry level program, but quite an improvement from our previous excel spreadsheet system. Quicken RPM 2.0 does not provide the ability to compare expenses, profits, between individual units/tenants on our property’s.” – D.W.
“Checked with my accountant on this one and turns out this is actually a QUICKEN product so it doesn’t have the double entry system and some other necessary business features.” – C.K.
“The new software [Rental Property Manager] did not produce any late notices and is not able to be interfaced with Quickbooks.” – E.E.
I hope you too will turn to QuickBooks since it is a real business accounting software package. With this guide and our data files, it is not hard to set up, and you’ll quickly be moving in the right direction.
1.08 Benefits of QuickBooks ↑
QuickBooks is the number one bestselling small business accounting software in the world. It is extremely easy to use, very powerful, adaptable, loved by accountants, and it creates a multitude of detailed reports. It saves you time, money and headaches.
You will be able to get the information you need out of the program through customizable reports, and efficiently enter the data through its well-designed user interface.
1.09 My Personal Goal ↑
I first wrote this book after our company struggled with implementing QuickBooks for residential rental properties. It is my goal that:
- You will successfully implement QuickBooks as your business accounting solution.
- You will be completely satisfied with my book and website.
- You will build a competent team of professionals.
- You will tell your partners and associates about my product if you find it useful.
If you are not satisfied with this book, let me know within 30 days of purchase and receive a complete refund. Your satisfaction is important to me.
That concludes the excerpt from the book, Chapter 1. Please read more on our blog, or more efficiently, purchase our training today to get expert assistance in managing properties in QuickBooks.