I am just wondering if anyone can help me with setting up quickbooks for a letting agent? I need to account for rental income received on behalf of a landlord. Am I right in thinking that I firstly have to set up a CUSTOMER (the landlord) and then the actual rented property as a SUBACCOUNT? I believe the resulting transactions should pass through a creditors account.
The rental money comes in and then needs to be transferred to the landlord account. A commission sales invoice needs to be raised for the managing agents fees which needs to be deducted from the rental together with any other recharged amounts before the money can be paid to the landlord.
How would this work in quickbooks?
If you have QuickBooks Online Plus, the best feature to organise these transactions would be Projects. This would allow you to track all transactions against a single property so you can then work out how much can be paid to the landlord. However, setting them up as a customer and as the rented property as a sub-account would also work.
Please let us know which version of QuickBooks Online you are using and we will be able to advise the best route.
If at all possible I would like a step by step guide from receiving the rent to paying the landlord. As a ficticious scenario:-
First step money comes in to client bank account say £1000
Agents commission is £200
Plumber was paid by agent £100 from the same bank account that the rent was received in (so a straight recharge)
Balance to landlord £700
This is what I would advise, however I have to make it clear that we are not accountant trained, and so we always recommend speaking to an accountant before following our advice:
You could first create a holding account (set this up as a current account). You could then receive the full £1000 to this holding account. You could then Expense out the Agents Commission from this account, as well as the plumber charge and then finally expense out the remaining balance. This would allow you to track how much is remaining of the amount that you are still left to split.