Disclaimer: this guide requires QBO Plus version.
If you are an owner of property management business which has dozens of pieces of property to its name, tracking rental incomes and expenses for each property could be a big challenge. Each property requires a long trail of numbers scattered across your books, containing information such as how much you originally paid for it, how much you have spent on repairing or refurbishing it and how much revenue it has generated, if any. All of that is fine. Until one day, you’re going about your daily routine when suddenly, almost magically, a meeting pops up in your schedule for the next day. The meeting, it seems, will require you to produce all the accounting records for each property.
The problem is that although all of that information is in your records, it’s not all in one place. There is no neatly arranged and titled book that has everything you need. You need to look up property tax payments from one place, costs of repairs and painting from another, and so on until you’ve examined every single relevant transaction. And if you’ve owned a piece of property for a long time, the numbers will pile up higher. And you have less than 24 hours to compile a full report from this jumble of figures and text. Even if you do manage to accomplish this feat, there is always the possibility of human error.
QuickBooks Online has options that greatly simplify the task of tracking any aspect of a business including property management, and QBO Plus has a specific feature to track property class. This functionality helps you keep tabs on property, by creating lists and ensuring interconnectivity with accounting records. Each time a transaction occurs, the relevant property item can be mentioned specifically. For example, if you pay rent for office space in a number of locations, having a list of payments for each location would be a lot more helpful than having a single list containing all the rent payments.
Common Problem in the Setup
Often when setting up QuickBooks Online, business owners or accountants try to keep track too many details from the Chart of Accounts. Over time the number of general ledger accounts grow, causing complexity in recording transactions and producing financial reports.
Below is an example of poorly-designed Chart of Accounts:
- 5300 is Repairs
- 5310 is House #1 Repairs
- 5320 is House #2 Repairs
- 5330 is House #3 Repairs
- 5400 is Property Taxes
- 5410 is House #1 Property Taxes
- 5420 is House #2 Property Taxes
- 5430 is House #3 Property Taxes
5 Steps to Set Up QuickBooks Online for Property Management Business
- Turn-on class tracking: Company Settings → Categories → Track Locations → Location Label
- Create a list of Property: Lists → Properties → New
- Select a specific property in each transaction
- Create recurring rent payment invoices for each property
- Generate custom reports for each property: Report → Customize → Property List