would you like to know how to set up the chart of accounts for a property management service company
well then you should watch this video property management
service company input the chart of accounts
if you have any questions about this topic you can leave them in the comments section below and
i'll do my best to help you and of course if you feel the video helped you i hope you will click
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now you may well ask what is the chart of accounts basically the chart of accounts
is the general ledger in the old days it was called the general ledger and physically it
was a notebook where each page in the book was a separate account then you might ask what is
an account well in order to understand what the chart of accounts is and in order to understand
what an account is let's clearly define each item an account is an individual record
of transactions you need an account for each bank account credit card account
income source and expense that your property management company has
you will need other accounts as well the chart of accounts window allows you to delete edit and add
accounts to the chart of accounts now that's what it means to manage the chart of accounts it means
having the ability to remove an account that you don't need and if the quickbooks software does not
let you delete the account you can click to make the account inactive so it won't clutter up the
list and you can see your accounts more easily and of course it gives you the ability to add accounts
now this is a typical example this is not our chart of accounts but it's a typical example of
way that of the way the chart of accounts window would look in a quickbooks company
and when you put in the information and add the accounts you will add the account name
and you will also be required to add something else you will be required to add account type
now you must be very careful account type in quickbooks is not the same thing
as account type when studying accounting theory so account name can be anything you want
as long as you spell it the way you need to spell it the names of the accounts will show up exactly
as you type them into the chart of accounts and that's and they will show up on reports exactly
the way that you named them in the chart of accounts but account type when you put
at put that in and you uh choose it you will be choosing account type from a preset pull down list
so there's a finite number of account types for you to choose from so then the question is
how do you know the right account type well account type determines the type of transactions
that quickbooks allows you to record into the account account type determines what reports and
what part of reports the account will be displayed in so here is our example chart of accounts
and we're going to put this in right now step by step exactly as you see it notice i put all
of them in capital letters and the two that are in lower case are two accounts that quickbooks
created and added to the chart of accounts because we need them whether we know it or not so
when we add the accounts we'll keep them in capital letters so that we can clearly
distinguish between the accounts that we added and the accounts that quickbooks gave us
to open the chart of accounts window in quickbooks we click list chart of accounts
notice quickbooks actually gave us four accounts but we don't need the two payroll accounts
the problem is if you right click on a payroll account and you click delete it won't let you
you have to click on it go to the bottom left and click account make inactive and then it
will disappear same thing with the other payroll account select it by clicking on it click account
make an active and then it will not clutter up the list
don't worry any inactive accounts that you removed you can click this box and
you can see them and if you want to bring them back to the list you can right click
by selecting them and then choose make account active and then it will show up again on the list
so let's make the account inactive so that we only have the two base accounts that we need and now
we'll enter our accounts one at a time cash in chase bank no problem account new now you will
only get this window for the first account you add or if you add accounts one at a time but if you
are adding accounts many in a row you will save the next window watch so the first one is bank
click continue now this is the window we will stay in to add all the rest of the accounts by clicking
save and new and all of the different account type choices are here the first one is bank
and again you can name it anything you want and spell it any way you want
just be aware that exactly how you spell it is how it will show up on the reports save and new
now if we look behind us we see it was added to the list
so what's the next one management fees income okay that's an income type of account
and then we click save and new and you can see it was added to the account
in our example the rest are expenses delivery electricity finance charge expense
now if i click save a new it remembers the type so
oh sorry electricity what was the other one uh we put in
we put in oh delivery so then this one will be electricity
uh finance charge
okay telephone
see what else we have here uh maintenance repairs and supplies so maintenance
see how quickly it goes
and we're done
when i click save and close now you can see that we have the chart of accounts and look how similar
it looks to the little diagram that i made for us okay but we're not technically finished we have to
put in one more account in the chart of accounts the most important account one more account
to add the name of that account will be called rent payable to landlord clients it's a liability
account on your financial statements because it represents what you owe to the landlord between
the moment you collected the rent from the tenant and the moment you pay the landlord the rent
it represents the total money that you owe to all landlord clients in total for the collected rent
minus whatever expenses you paid on their behalf during the month it shows the total of
what you expect to pay out to all landlords in the coming month now it must equal the total balance
of all landlord clients together that's the reason for the rent payable to landlord clients so how
do we accomplish this how do we make an account that will do that for us the way to do that is
to make sure that all the clients balances add up to that account the only way to have an account
in quickbooks that does that is to make the account type equal to accounts receivable
that's the account type of the account that represents the total money that we owe to
all landlord clients at the moment that the tenants pay us the money now try to remember
account type in quickbooks is not the same thing as account type when studying accounting theory
accounts receivable when you study account uh accounting theory is equal to what the
customers owe us but if you have experience in business and you are an experienced an accountant
you understand that functionally speaking accounts receivable type in quickbooks
is equal to the balance of a specific set of customer transactions
that's what it means in practicality not an accounting theory so experienced people
understand this people who only studied accounting in school sometimes have trouble swallowing
this because they don't understand what's important when you're actually working on a job
our clients balances will be negative because we owe them the money until we pay them
this will make a credit balance for the amount we owe and the account will correctly show on
the credit side of the trial balance so this way we can see that it equals the total of all clients
as well as having the correct balance before making the financial statements
now for non-experienced people i'll give you some simple information that you can circle back to
to understand your trial balance will be completely correct if you follow this method
you can export your trial balance before making your financial statements or you can make a normal
simple monthly accountant adjustment to move the account to the correct side of the balance
sheet if you need to print your balance sheet from quickbooks instead of exporting the trial balance
and making the statement that way so let's just go ahead and add it okay what's the name of it again
rent payable to landlord clients and it's an accounts receivable type of account
account new and it's an account receivable type of account which you could also choose from here rent
payable
to
landlord
clients okay save and close and now we have everything we need in the chart of accounts
you