QuickBooks Online: A solution for property management?
Having a number of clients in real estate, we know that property management companies have their own set of special needs when it comes to accounting software. But, what if your company is not quite big enough to merit a specialized accounting system that comes with a big HR investment and an even heftier price tag? We have found that QuickBooks Online (QBO) works well for small to mid-size property management companies.
The key piece you want to accomplish by using QBO for property management is to keep the P&L for the actual property management company separate from the properties you manage, while still being able to run all necessary reports for the owners of the properties as needed. With QBO it is possible to do both in one file if you map certain fields in certain ways.
How to use QBO for Property Management
- Set up each property or unit you manage as a customer.
By doing this, you are able to set expenses as billable and charge them back to the property owner. You can easily pull a P&L report by property or unit on a monthly, seasonal or YTD basis as needed.
- Use location to note the different property locations.
By setting this up from the start when creating your QBO file, you can run reports by unit and location, which becomes essential to the property owners if they have more than one unit or property.
- Use class to highlight different types of service offerings.
Whatever operational services are necessary for each property can be categorized in QBO using the class field. This is helpful if you ever need to run a P&L to know which service is generating the most income for your company, or if you are experiencing losses somewhere and want to hone in on the COGS related to that service. You can examine your margins even further by both class and customer in order to see specifically the costs involved for each property you are managing.
- Use category to code your expenses and income to accounts.
Categories can be set up by account name to classify the different expenses and property management services you offer. Simply select them from the drop-down menu when you record a transaction in QBO. The account categories are set up within the Chart of Accounts section under Your Company by clicking on the NEW button.
- Record income and expenses either manually, syncing with a cloud accounting app or a combination of both.
When you are using QBO for property management, generally you record transactions using the same method you would for any business with a couple of additional helpful steps. Select the class to indicate which service it relates to. Additionally, if it is an expense for any of the properties or units you manage (as opposed to your own business expense), mark it as billable and select the appropriate property or unit from the customer drop-down menu.
- Use the split function for multi-service vendors.
When entering expenses, use the split function to record an invoice that includes two different types of services, such as cleaning and waste removal.
- Run reports as needed.
Now that you have set up your QBO file for property management, you can run reports as needed (P&L, balance sheets, etc.) by class, customer and location. This will help greatly with any reporting you are required to provide to the property owners.
While QBO cannot always meet all the accounting needs for property management, if you sync it with other cloud accounting apps like Bill.com for invoices and Gusto for payroll, it can operate as a fairly robust system for small to mid-size property management companies.
Do you need help with QBO for property management? We’d be happy to help. Contact us to learn how our team of Cloud CFO professionals can look after your property management company’s books.