How to use Quickbooks for Real Estate Investors and Landlords
Real estate owners and Landlords usually find themselves struggling and spending too much time managing their Property and keeping track of all the expenses. However, Quickbook is a decent solution to this problem.
This article will discuss how to use Quickbook for Real Estate Investors and Real Estate owners. Moreover, we will look at the suitability of Quickbook for Realestate Investors and Landlords as well.
What is QuickBooks?
Quickbook is accounting software that helps small businesses manage their ongoing monthly operations and keep track of them. It is usually used by accountants and real estate or property managers to keep track of their expenses and other necessary information required from the owner.
How to use Quickbooks for Landlords and Real Estate Investors
Now we will take you to an easy and step-by-step guide that can help you set up your own QuickBooks real estate management system that can help keep track of all the work.
It is straightforward to operate and set up your rental property management bookkeeping system. You do not need any professional to keep track of all the expenses or buy any expensive software to manage your system.
So, here we have come up with all the management software in QuickBook that can help you manage your properties, credentials, and operations. However, it is essential to note that there is no specific version of QuickBook designed only for the Property or real estate management industry.
However, the working algorithm fits the best for real estate owners and is generally suggested. Now, follow these steps to set up your account and start using QuickBook.
Setting Up QuickBooks:
- Add your business bank account credentials.
- Specify your Tenants as Customers
- Specify your properties as Classes
- Add any payees as Vendors.
- Set up your Chart of Accounts using the Schedule E categories
- Select your Income Types if you are a Landlord (Rent, Pet Fees, etc.) and Set up recurring invoices for Rental Income, respectively
- If you’re an investor, set up the mortgage or any ongoing maintenance fund or any outgoing monthly. If you are getting rental income already, follow step 6.
If you want to input the rent received from your Property, click on the customer’s menu and Select Receive Payments to add the credentials.
Make sure to select the appropriate Tenant from the customer’s list; you can add a bookmark to avoid any mistakes and not get confused in entering the data.
Features of QuickBooks for Real Estate Developers
After you’ve set up your QuickBook property management account, you’re all ready to go. However, you still need to know about some of the robust features that can facilitate you in automating and managing your projects if you’re an individual and trying to save time. Here are some of the most essential features that QuickBook offers to real estate owners:
- QuickBook offers setting up multiple accounts for all types of categories of expenses such as renovations, rental income, mortgage, interest rate, and financial statements. It helps in optimizing your bookkeeping and producing accurate results of your expenses.
- The Financial Analysis and Management Reporting feature helps real estate developers to assess their business financial performance, monitor their portfolio, and track their monthly or day-to-day expenses.
- The ” Project ” feature in QuickBook allows you to allocate budget and invoices under a customer/tenant. As it facilitates in calculating profit and loss of each Property, helping in showing the correct direction of your real estate business.
Should I use QuickBooks Online or Desktop Version for Real Estate Management?
The decision to use any software depends on your mobility and usage. However, most real estate businesses prefer the QuickBook desktop version as it offers more features and facilitates automating the management of your properties.
On the flip side, QuickBook Online keeps on adding more features that are helpful to manage costs per project. For example, the Desktop version is suitable for seamlessly reporting, assigning, and tracking income. Meanwhile, The online bookkeeper options give an advantage to QuickBook Online.
It is better to test both versions of QuickBook to finalize which version suits your business model. Again, you might need to consult with your accountant regarding this issue.
QuickBooks Real Estate Agent Commission
If you are a realtor, it is expected that you might run into some situations where some items in the business will not have to deal with, commonly named as commission income. In QuickBooks, you can set up an account specifically for commission income and directly link it to the Commission Income Account.
Additionally, you will create either a sales receipt or an invoice. Both scenarios are used in different situations. For example, you create a sales receipt if you’re entering an amount that you received from a property, and you will create an invoice if you are owed money.
Both scenarios have different utilities. By creating an invoice, you’ll be able to track who owes you the money. Indeed, by creating an invoice, you’ll be able to track who owes you money. If you want to verify the data and double-check the transactions and records, check your open invoice report section, where you can track your expenses.
Stessa vs. QuickBooks
Rental property owners can utilize both Stessa and QuickBooks to track income and spending, assets and liabilities, depreciation, and owner’s equity. However, investors should be aware of two significant differences between QuickBooks and Stessa.
Stessa was created mainly for keeping track of rental financial performance and producing a trail of evidence for real estate investing by other real estate investors. Enter a property address, link your business bank and mortgage accounts to sync information automatically, and run reports including an income statement, rent roll, net cash flow, and real estate balance sheet.
On the other hand, QuickBooks is a general-purpose accounting program that can be used by practically any sort of business or individual. While their software can be used for a real estate firm, there are certain hurdles to overcome to make QuickBooks work for rental property.
QuickBooks, no doubt, is a trusted and most used management software that many real estate owners widely use. However, it is best for individuals who own limited real estate and want to track their profit/loss or rental income.
The exciting part is that QuickBooks was not explicitly designed for Real Estate Management. Still, the feasibility and easy-to-use UI makes it the most used software by Landlords and Real Estate Investors. For more updates, make sure to sign-up for our newsletter to keep yourself updated on news worldwide.