Q: I am a property manager for several properties. I am setting up the lessees and lessors. Do I place them as customers or as customers and vendors?
A: The lessee and lessor sign a contractual agreement in which the lessee (tenant) agrees to pay the lessor (property owner) for the rental of an asset, in this case, a rental property. Often, the lessor agrees to provide maintenance to the property. In the event that the property owner does not want to actively manage the property, a third party manager will assume the responsibilities for a fee.
If you are a landlord and own all of the properties, you do not need to enter your name as a customer, class, and vendor. Add the properties as Customers.
As a property manager, you provide property management services to the lessor, the property owner. Add the property owner as a (1) Customer, a (2) Class, and a (3) Vendor.
First, add the property owner as a Customer. As a property manager, the owner is your customer. You are providing him or her with your management services. This will also help you organize the tenants.
Enter all of his or her contact information. While QuickBooks is a financial software, you can effectively use it as a property management tool if you enter all of the data. If the shipping address is different from the billing address, make sure you enter both addresses.
Second, enter the property owner as a Class. As you incur expenses for properties, you will want to know how much was received and spent per owner for each property.
Open the Lists menu and select Class List. Right-click and select New. Enter the property owner’s name.
Third, enter the property owner as a vendor. This will simplify the transferral of the rental income to the property owner and track owner’s proceed. Also, for tax purposes later on, you will be able to calculate 1099 more easily.
Open the Vendor Center. Create a new vendor. QuickBooks does not allow a Customer and Vendor to have the same name. Distinguish the Vendor property owner name from the Customer property owner name. In the screenshot below, I added an _V to indicate that the property owner is a vendor. Do what works best for you. Also make sure that you indicate how the property owner’s name should appear on a printed check in the field above.
Entering the property owner is the first step to setting up your QuickBooks file for property management. Next, add the properties you will be managing.
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