Q: How do I track in QuickBooks properties that I own, but have hired a management company to deal with everything?
Thanks for emailing me. You have a few choices, depending on how much information you want to track, and how much you trust your property management company. I’ll lay out a few of the options, ultimately I encourage you to try a few different ways, and decide what is best for you. Also, consulting with your accountant will be essential to make sure you record things properly for taxes.
Option 1: Record Everything As If You Managed Them Yourself
One way you can handle things is to enter most of the same information you would if you managed the properties yourself. For instance, you might want to know the names of each tenant and his/her current status in payments. Who is behind, what are the late fees, etc. Probably though, you don’t want to do this, because you’ve hired a mgmt company.
Option 2: Record Per Property From Their Statements
Another way is to record high level income and expense per property. On a monthly basis, what did each property earn, and what were the expenses and capital outlays. This should be reported to you monthly in your statements from the management company. You can track income/expense with classes. Capital investments would be tracked directly in the asset accounts. (Since your business owns the properties, you’ll want to have asset accounts for each. This can be as the book illustrates).
To make the net deposits correct (after reflecting gross rent minus fees, etc) you can use journal entries, or negative adjusting amounts in the make deposit screen. See Section 4.14 for an example (p 132 in 2nd edition) of using negative amounts in a deposit for adjusting.
Option 3: Rely On the Management Company to Also Do Your Bookkeeping
Lastly, if you have great trust in the property management company, and effectively are outsourcing some bookeeping and accounting to them, you might be able to just record individually some high level numbers and rely on their books of your properties. And trust their statements and/or online access and/or their own set of books for your company. Many are reluctant from this approach, as it removes the owner too much from the assets they own, and seems to make you more vulnerable to not knowing what is going on, or making mistakes come tax time. At minimum if you want this level of outsourcing, it would be better to have another bookkeeping company track Option 2, and they work with the management company.
So, you’ll want to run it by your accountant after you get a system you think you like. I encourage you to have individual asset accounts, one income/expense account (possibly with subaccounts for more detailed tracking). But then different classes for each property. And record monthly (or quarterly if that’s ok with your accountant) the income, expense and investments in each property. Also, take note of the gross income and subtract the management fee expenses, rather than just recording the net income.
I hope this helps. Order our full training on managing properties in QuickBooks today. It comes with a money back guarantee. And thousands of customers love it (read testimonials ♥).