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Rental Accounting

Should You Use QuickBooks For Rental Properties?

Contents

When people think about accounting for their business there is an almost audible mental groan – and landlords are no different. The solution is to start looking for software to make accounting easier. 

When searching for professional accounting software for your rentals, it’s likely you’ve come across QuickBooks — you may even have tried it already but struggled to make it work for you. In this article, we’ll explore how to set up and use QuickBooks for rental property accounting.

Plus, we’ll outline its strengths and weaknesses when compared to industry-specific rental accounting software like Landlord Studio which is designed with landlords in mind.

Can You Use QuickBooks for Rental Properties?

You can use, and people do use, QuickBooks for real estate in several ways, including to track income and expenses associated with your rental property portfolios.

However, QuickBooks is primarily designed for small to midsize businesses. The same issues that make spreadsheets unsuitable for rental portfolios make QuickBooks a challenge to use for rental properties. Essentially, when tracking income and expenses for your rentals, you need to keep your finances for each property separate, ideally on a unit by unit basis. In fact, you almost need to treat each property as an independent business.

In terms of using spreadsheets, this means having a separate sheet for each property, which can quickly get out of hand. Similarly, the user interface for QuickBooks is not designed for individuals managing numerous separate accounts.

In other words, unless you’re skilled or have plenty of experience with QuickBooks, you may be better off using property management software that allows you to manage properties separately and that is designed to make income and expense tracking as simple as possible.

Good property management software will also offer property management specific features, such as rental listings and tenant screening.

Setting Up QuickBooks For Your Rental Property

If you do decide to use Quickbooks for rental property accounting, follow these steps to set up your account and start entering rent payments.

Setting up:

  1. Add your business bank account.
  2. Create your Tenants as Customers.
  3. Configure your properties as Classes.
  4. Set up your Chart of Accounts using the Schedule E categories.
  5. Select your income types (Rent, Late Fees, Pet Fees) as Products.
  6. Set up recurring invoices for Rent Payments.

To enter rent received:

  1. Click on the customers’ menu –  and select Receive Payments to begin entering your rent receipts.
  2. Choose the cash receipt account from the accounts dropdown list.
  3. Select the appropriate tenant from the Customer list.
  4. Enter the amount of the rent payment. If you are inputting rent for only one tenant, click “OK” to save the receipt. If you have rent from more than one tenant, select “Group with other undeposited funds” to move on to the next cash receipt entry.

It’s worth exploring some tutorials on Youtube that can walk you through the setup process. 



The Limitations of Using QuickBooks for a Rental Property

Although it is the leading accounting software for small businesses, there are some limitations to using QuickBooks for real estate, particularly for managing rentals. In contrast, property management software like Landlord Studio has industry-specific features that are specifically designed to make rental property management easier.

The first limitation of using QuickBooks for a rental property is that it’s difficult to set up everything correctly. Of course, there’s always a learning curve when adopting new software, especially when the software isn’t designed exactly for your purpose. In this case, you need an even better understanding of the program before it will start saving you time.

The second major limitation is that QuickBooks doesn’t have industry-specific features. For example, although it facilitates invoice payments, such as for rent collection, it doesn’t have a tenant portal or allow you to set up automatic rent payments. In addition, whereas it does allow you to track tenants, it doesn’t have the functionality to send templated emails to tenants or to automate rent reminders. Nor does QuickBooks have features like built-in tenant screening.

Finally, since QuickBooks is not targeted toward landlords, the support documentation and articles don’t provide industry-specific tips and there are limited educational materials to help you utilize the platform to grow your portfolio.

It’s for this reason that more landlords are switching to property management software like Landlord Studio. Such software allows you to manage your finances by property or unit. Plus, it has common income and expense categories in the default settings. Other features include differentiating between rent and other forms of income, setting reminders, and keeping all your relevant documents and receipts organized in one place.

Using Landlord Studio Instead of QuickBooks for Rental Property Management

Improved organization and better, more tailored software solutions can mitigate (if not solve) many of the problems landlords face. As a result, landlords can streamline the management of their rentals.

Automation

With Landlord Studio, you can automate time-consuming tasks and communications, such as with rent reminders and tenant auto-pay. Plus, you can track income and expenses on an organizational, property, or unit level.

Reporting Designed for Landlords

You can generate a number of customizable reports instantly, such as Schedule E reports, rent roll reports, occupancy reports, and rent ledgers.

Track Tenancies

You can track your tenancies and occupancy rates and store lease documents. Landlord Studio keeps everything organized, including by categorizing your expenses. You can store all the relevant documentation and receipts in the same place.

Scalable

Landlord Studio is not only easy to use but will scale with you as your portfolio grows. It does this by using a simple design and user interface along with industry-specific features that will optimize your property management processes.

An Emphasis on Customer Support

Finally, Landlord Studio is committed to providing the best customer support. This ensures you’re able to set up your accounts quickly and make the best use of all the available features. This will minimize the amount of time you spend on your accounting and ensure your books are accurate and up to date. Landlord Studio is constantly developing new features and implementing product improvements based on customer feedback.

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Using Landlord Studio With QuickBooks

Landlord Studio helps you create a streamlined workflow, minimizing the time you spend managing your rental accounts. Add to the equation the industry-specific features (like automated rent reminders) and it’s clear that it makes sense to use Landlord Studio for the day-to-day management of your rentals.

Landlord Studio is available on desktop, iOS, and Android, making managing rentals on the go easier than ever.

With that said, there’s a reason why QuickBooks is the leading personal accounting software. It’s an excellent solution for tracking your business’s income and expenses. This is why some landlords (typically those who have other sources of income as well as rental properties) choose to use QuickBooks in conjunction with Landlord Studio. Combining the two allows them to gain a complete overview of both their personal finances and their real estate accounts.

To help you use both together effectively, we’ve developed some advanced reports that you can export from the Landlord Studio app as .pdf or .csv files. You can save these to your device or send them straight to your accountant from the app.

Landlord Studio’s Reports

We currently have more than 15 reports in Landlord Studio and are constantly improving these and adding new ones to the system. Every report is fully customizable and can be filtered by property and unit, income category, expense category, and date range.

Additionally, we recently launched our accountant view feature. This update allows you to invite your accountant to your organization with view-only access to your financial reporting.

A Few of Our Reports Include:

  • Profit and Loss (P&L)
  • Income Expense Statement
  • Income Expense by Category
  • Schedule E Report
  • Overdue Rent Payments
  • Reminders
  • Mileage
  • Net Worth Report
  • Occupancy Report
  • Overdue and Upcoming Expenses
  • Payments Made (Lease & Category)
  • Rent Ledger
  • Rent Roll
  • Tenant Directory
  • Plus More+

Exporting Reports to Excel.

On iOS, you can export your Profit and Loss report as an Excel file.

To do this:
  • Go to the “Reports” page 
  • Tap on “Report Type
  • Scroll to the bottom
  • Tap on “Export to Excel

Importing Your Excel Report to QuickBooks

For detailed instructions on importing excel files to QuickBooks head over to their help page here: QuickBooks Support

Final Notes

Good bookkeeping is the backbone of any business. Whether you choose to use property management software like Landlord Studio or accounting software like QuickBooks or Xero, it’s vital you organize your books properly and keep careful records of income and expenses.

This is important because it gives you a better understanding of your property’s performance and ROI. It also allows you to accurately calculate your claimable expenses – a nearly impossible task if you leave this to the end of the year. Finally, if you are audited by the IRS or another tax body, you’ll have accurate, detailed accounts with all the necessary documents.

Landlord Studio allows you to quickly and easily track rental income and expenses, generate professional reports, reconcile with your bank, and more. It’s a great alternative to Quickbooks for landlords.

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Ben Luxon

Ben is the editor and lead writer for Landlord Studio. He has worked with real estate professionals all over the world and written educational articles on tech, real estate, and financial growth for sites such as Forbes, TechBullion, and Business Magazine.

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