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Anonymous
Not applicable

Set up Rental LLC

@mcwagner

 

Hi Mark.  I'm new to being a landlord.  Bought my first property and rehabbed it last year, got CO in December.  Put tenant in place on Feb 1 of this year.  Couple of question please.  I need help settting up QBO (the basic version) for the landlord side of things - rent collections, application fees, maintenance expenses, etc.  Also, I purchased and did the rehab with lines of credit and refi'd out with a mortgage that left me a little short on paying everything else back.  Can you guide me to set those up and reconcile that part as well?

 

Thanks.

Anonymous
Not applicable

Set up Rental LLC

Hello there, @Anonymous.

 

Let me help route you to this related article in setting up accounts for property management if you're using QuickBooks Online: https://quickbooks.intuit.com/community/Reports-and-accounting/Set-up-Chart-of-Accounts-for-Property-Management-in-QuickBooks/m-p/165092#M1953.

 

We can also try looking into @JamesOng's suggested article for a detailed guide in setting up property management: https://community.intuit.com/articles/1502157-create-a-property-management-company.

 

Keep us posted if you have other questions. I'm here to help however I can.

Anonymous
Not applicable

Set up Rental LLC

@Anonymous

 

I'm not a property management company so I'm confused by your recommendation.  I am a sole member LLC that rents houses.  I don't have a property manager do it for me.  So I need to set up the correct chart of accounts to show rent collected and then the expenses associated with each property.

 

Thanks.

amara
Level 1

Set up Rental LLC

@mcwagner Can you send me the COA as well? Thank you!

john-pero
Community Champion

Set up Rental LLC


@Anonymous wrote:

@Anonymous

 

I'm not a property management company so I'm confused by your recommendation.  I am a sole member LLC that rents houses.  I don't have a property manager do it for me.  So I need to set up the correct chart of accounts to show rent collected and then the expenses associated with each property.

 

Thanks.


Pull up and download Schedule E https://www.irs.gov/pub/irs-pdf/f1040se.pdf All you are going to need at the top level is Rents. I subdivide Rents by Tenant and Subsidy since many of our tenants have government vouchers but to the IRS rent is rent.  As far as expenses you may not have all of what is listed but use what you need and add on the fly when necessary.

 

Each deeded property has to stand alone for P&L and that is why there are multiple columns (and you may end up with multiple pages). Only a full-time real estate professional can combine all their properties into one reporting column.

 

Otherwise in your COA it will depend on how complex your business model is. Rather than Fixed Asset List (or Manager) I do list every property as a Fixed Asset, dividing each between Land and Building. You depreciate the building and improvements but you never recoup the land value until you sell. Long Term Liabilities for mortgages and Current Liability for Security Deposits held (preferably in a separate savings account)

Anonymous
Not applicable

Set up Rental LLC

I am wondering if I can see your chart of accounts and how it is set up as well?  

familiar
Level 2

Set up Rental LLC

@mcwagnercan you please forward me the property management chart of accounts?

Thank you!

mcwagner
Level 5

Set up Rental LLC

sure. send me a PM.

DPerry
Level 1

Set up Rental LLC

I am wondering if you have done a video or anything to set up a Rental? I believe the idea will work, but I'm looking for a bit more information.

Anonymous
Not applicable

Set up Rental LLC

Hello, @DPerry.

 

Currently, we have no available tutorials for setting up Rental LLC. However, I've seen some videos about this on YouTube and blogs created by QuickBooks users and ProAdvisors.

 

You may want to check it out to get more information about their setup.

 

Also, you can visit the QuickBooks Online Blog and Resource Center for articles and guides in managing your growing business. 

 

Please know that you can always get back into this post if you have questions. I'm here to help.

john-pero
Community Champion

Set up Rental LLC

Google is your friend, not the enemy. 3 second search and here is a recent youtube that should help https://youtu.be/xwO879TAJuw

 

And I will repeat what I repeated and repeated and repeated. Look at Schedule E as this is where you will record rental property income and expenses (each property is a single column - if you own 5 rental houses you will fill out 5 columns - they MUST be kept sepaarate, hence the beauty of using Plus or Advanced with Class Tracking where each property is a Class)

 

Schedule E https://www.irs.gov/pub/irs-pdf/f1040se.pdf

There are only 2 income accounts and you probably only will use the 1. You can add other income accounts in your chart of accounts for fees other than rent you charge your tenants but when you file your taxes you will lump all income together as RENT.

 

There are only 15 expense lines on the form although you can add a supplemental sheet to expand the "other expenses" for things not included in the other 14. As long as it is a legal deduction you can list it.

 

The only other things you need in your COA are your 2 bank accounts (working and security deposit reserve) and your properties as assets with land separated out since land cannot be expensed or depreciated.

 

You might have other asset accounts if you take advantage of accelerated depreciation for certain pieces of your rental property puzzle. You can depreciate parking lots, appliances, furnaces, furninshings, etc separate from the building and write them off much sooner than the 27.5 years allowed for residential rental buildings

mcwagner
Level 5

Set up Rental LLC

Your chart of accounts should reflect what you, the landlord, want to see to run your business.

It's MY job to take that information and put it on the tax return.

For example, Sch E has one blank for interest.  However, you might want to see mortgage interest and credit card interest as two separate lines.  Sch E has no place to put: amortization (loan fees), bank charges, HOA Fees, warranty expense, etc.  But as a property owner, you might benefit from having these expenses on your profit/loss statement.  Maybe you want to track building maintenance and repair separately from HVAC repairs, so that you can better tell when it's time to replace that aging HVAC unit. 

The chart of accounts for YOUR business should be what YOU want it to be.

 

Mark Wagner, CPA

lollyzam
Level 1

Set up Rental LLC



@mcwagner wrote:

Your chart of accounts should reflect what you, the landlord, want to see to run your business.

It's MY job to take that information and put it on the tax return.

For example, Sch E has one blank for interest.  However, you might want to see mortgage interest and credit card interest as two separate lines.  Sch E has no place to put: amortization (loan fees), bank charges, HOA Fees, warranty expense, etc.  But as a property owner, you might benefit from having these expenses on your profit/loss statement.  Maybe you want to track building maintenance and repair separately from HVAC repairs, so that you can better tell when it's time to replace that aging HVAC unit. 

The chart of accounts for YOUR business should be what YOU want it to be.

 

Mark Wagner, CPA



@mcwagner wrote:

Your chart of accounts should reflect what you, the landlord, want to see to run your business.

It's MY job to take that information and put it on the tax return.

For example, Sch E has one blank for interest.  However, you might want to see mortgage interest and credit card interest as two separate lines.  Sch E has no place to put: amortization (loan fees), bank charges, HOA Fees, warranty expense, etc.  But as a property owner, you might benefit from having these expenses on your profit/loss statement.  Maybe you want to track building maintenance and repair separately from HVAC repairs, so that you can better tell when it's time to replace that aging HVAC unit. 

The chart of accounts for YOUR business should be what YOU want it to be.

 

Mark Wagner, CPA



@mcwagner wrote:

Your chart of accounts should reflect what you, the landlord, want to see to run your business.

It's MY job to take that information and put it on the tax return.

For example, Sch E has one blank for interest.  However, you might want to see mortgage interest and credit card interest as two separate lines.  Sch E has no place to put: amortization (loan fees), bank charges, HOA Fees, warranty expense, etc.  But as a property owner, you might benefit from having these expenses on your profit/loss statement.  Maybe you want to track building maintenance and repair separately from HVAC repairs, so that you can better tell when it's time to replace that aging HVAC unit. 

The chart of accounts for YOUR business should be what YOU want it to be.

 

Mark Wagner, CPA





RaymondJayO
Moderator

Set up Rental LLC

Thanks for joining this thread, @lollyzam

 

In the Simple Start version, you can set up the categories as sub-accounts. This way, you can keep track of your six properties.

 

First, you'll need to create a parent account so you can proceed in entering sub-accounts. Let me guide you through the steps. 

  1. Go to the Gear icon at the upper right. 
  2. Select Chart of Accounts under Your CompanyCreateParentAccount1.PNG
  3. Choose New.
  4. Select the account type in the Account Type drop-down. 
  5. In the Detail Type drop-down, select the type of account. 
  6. Enter an account's name in the Name field. 
  7. In the Description field, type in the account's brief description. 
  8. Click Save and CloseCreateParentAccount2.PNG

 

When adding a sub-account, you can perform the first to seventh steps above. Then, check the Is sub-account box and select the parent account from the drop-down. Once done, you can save it (see the screenshot below). For more details about this process, you can go through this article: Create A New Parent Account or Sub-account

 

CreateSubAccount.PNG

 

In case you want to track your tenants, you can set them up as customers. For detailed steps, you can check out this helpful article: Manage Your Customer List

 

I'm here anytime you have other concerns. Have a great day. See you around!

lollyzam
Level 1

Set up Rental LLC

It's good to hear I can manage all on Simple.  Once I've set up parent company and sub-accounts, how do I enter income and expenses under sub accounts?   It seems like it should be straightforward but I cannot figure it out.  thanks

MaryLandT
Moderator

Set up Rental LLC

Hello there, @lollyzam,

 

Let's enter your income and expense under the sub-account.

 

You need to set up your sub-account as the Income account for your products and services. While you need to select a category under the sub-account for your expenses. 

 

Please see attached screenshots below for your guidance.

incomesubaccount.PNGincomesubaccount1.PNG

If you need to create a product/service, please follow the steps listed below:

  1. Click the Gear icon at the right top.
  2. Select Products and Services under Lists.
  3. Click New.
  4. Select Non-inventory or Service.
  5. Enter your item information.
  6. Make sure to select the sub-account under the Income account drop-down list.
    setupproductandservice.PNG
  7. Click Save and close.

You can connect your financial institution if you want to bring in your bank transactions to QuickBooks,. This way, you'll also be able to set up banking rules so your income and expenses are posted directly to your register. Check this out for your guidance: Connect Bank and Credit Card Accounts to QuickBooks Online.

 

Feel free to leave a comment below if there's anything else you need about entering your transaction in QBO. I'd be glad to help.

lollyzam
Level 1

Set up Rental LLC

O


@MaryLandT wrote:

Hello there, @lollyzam,

 

Let's enter your income and expense under the sub-account.

 

You need to set up your sub-account as the Income account for your products and services. While you need to select a category under the sub-account for your expenses. 

incomesubaccount.PNGincomesubaccount1.PNG

Please see attached screenshots below for your guidance.

 

If you need to create a product/service, please follow the steps listed below:

  1. Click the Gear icon at the right top.
  2. Select Products and Services under Lists.
  3. Click New.
  4. Select Non-inventory or Service.
  5. Enter your item information.
  6. Make sure to select the sub-account under the Income account drop-down list.
    setupproductandservice.PNG
  7. Click Save and close.

You can connect your financial institution if you want to bring in your bank transactions to QuickBooks,. This way, you'll also be able to set up banking rules so your income and expenses are posted directly to your register. Check this out for your guidance: Connect Bank and Credit Card Accounts to QuickBooks Online.

 

Feel free to leave a comment below if there's anything else you need about entering your transaction in QBO. I'd be glad to help.


 

MaryLandT
Moderator

Set up Rental LLC

Thanks for getting back, @lollyzam.

 

To track your expenses under the sub-accounts, you need to write a check or expense. Then, select the expense sub-accounts under the Category section.

 

Here's how to create an expense transaction:

  1. Click the + (plus) icon at the right top.
  2. Select Expense or Check under the Vendors column.
    writeacheck.PNG
  3. Enter the vendor from the Payee field.
  4. Select the expense sub-account from the Category column.
    expenseaccount.PNG
  5. Click Save and close.

If you need to have a single representation on your Chart of Accounts or in your financial reports, check this out: How to Merge Accounts, Customers, and Vendors.

 

Keep me posted if you have follow-up questions and I'll get back to you.

lollyzam
Level 1

Set up Rental LLC

OMG this is insanely confusing. I want to track income and expenses for six rentals in the Simple program. I have watched your videos which DO NOT say what program they are teaching you. Simple? Plus? Useless. I understand from the last post that I need to set up a parent account for expenses then merge them. but I have no idea how to enter expenses under each sub account. There is no video or any explanation that show set up start to finish. I may just have to cancel and switch to Quicken for rentals which is vastly easier. Someone online said they would charge 200 and hour to help me set it up. And that's just the Simple software. I had a friend who is a financial manager for a major company come over to help me set it up. She went home defeated. Why isn't an Intuit program intuitive enough for someone who understands business and accounting?
Rasa-LilaM
QuickBooks Team

Set up Rental LLC

Thanks for your reply, @lollyzam.


I’m here to clarify about tracking the income and expenses for your rentals.


As mentioned by my colleagues, set up the categories as sub-accounts to record transactions using the Simple Start version. @MaryLandT updated her answer above, you can follow the steps on how to enter expenses in QuickBooks.

 

To monitor the transactions easily, make sure to select the correct sub-account when creating them. In regard to monitoring income, you can use the Invoice feature.

 

For additional resources, please see the following articles:

 

Let me know if you have further questions about QuickBooks. Please know I’m just a comment away for help. Have a good one.

 

john-pero
Community Champion

Set up Rental LLC

With a chart of accounts with parent and child relationships you would never post income or expense in the parent accounts but let those act as summing accounts only.

 

Quick example you create a single income account called RENT. You then create 6 sub accounts of RENT called rent1 rent2 rent3, etc. Same with expenses. Now all income and expense is recorded to each appropriate sub account.

 

You need 6 sub accounts for each and every income and expense account that you use. This can easily be 7x35 and if you add any more properties toy will very soon exceed the usage limits of 250 total accounts.  

 

Creating P&L by each sub account can be done but you have to filter and select each sub account for each report. You will want to memorize each of the 6 custom reports.

 

Whereas if you upgraded to Plus. - with Class Tracking - you only would need a simple COA matching the Schedule E and addition of 1 Class per property. One report - P&L by Class gives you each property income and expense in a single report and you would remain well within usage limits.

 

Is the expediency of using Plus over Simple Start worth the difference in price ? About $1-$2/day when you look at it.

 

The other small downside of Simple Starr is that you cannot manage vendor billing so all you can do is enter expenses as you write the checks - no way until Essentials at a minimum to enter future Bill's to pay.

lollyzam
Level 1

Set up Rental LLC

Thanks. That was a very clear and helpful answer. I know I'm cheap, but it irks me because I don't have employees or billing from my end or need much of what you pay for on Plus.
Charies_M
Moderator

Set up Rental LLC

Hi there, lollyzam.

 

I agree with you, lollyzam. John-pero provided such clear and informative insights on how to track properties using QuickBooks Online (QBO) Simple Start and QBO Plus.

 

For a better comparison about the different QBO products that suites your business needs, you can visit this link: Compare QuickBooks Online Products.

 

In addition to the information above, I'd like to share this article about setting up and using class and location tracking just in case you consider upgrading to QBO Plus.

 

For future reference, here are some resources that you can check out to learn more about QuickBooks Online features and function:

All the help can be found here in the Community so please don't hesitate to get back to me if you have other concerns. I'm always happy to help.

john-pero
Community Champion

Set up Rental LLC

Another option that uses a single COA is to treat each of the properties and units as customers and customer:customer. That treats the units as sub-customers and then add current tenants as third level deep. You will have to assign expenses to the unit or property level which requires a version that allows billable expenses. The reports per property as a customer will not be as clear or even possibly complete.
Sue Beth
Level 1

Set up Rental LLC

We personally own 23 rental properties, single family, and manage them ourselves. I keep the books and my husband does most of the maintenance. 

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