welcome to our video series QuickBooks for landlords this video is an overview of a
landlord's situation and exactly how to set up QuickBooks specifically for landlords landlords
should use most of QuickBooks the way every other business does but property management has unique
challenges that these videos will address what does a landlord need to do well a landlord needs
to record rent payments in advance as unearned income that would be consistent with generally
accepted accounting principles a landlord must make the unearned income become earned rental
income as time goes by a landlord must keep track of every tenants balance and how much is prepaid
and how much is owed for each tenant a landlord must give rent receipts when receiving rent in
advance of the tenant stay a landlord must keep track of what each individual apartment costs the
landlord for specific expenses like repairs and so on the practice file that I have provided for
you has everything you need it has a customer list which I called the tenant list it has a
vendor list for businesses whom we have to pay for the services that the landlord needs to run
the building it has a basic chart of accounts with common accounts that most businesses and
most landlords need the preferences are already set in the Preferences window these are things
like defaults and how the file will automatically behave an icon bar of shortcuts to only the things
that we will need this icon bar is customized for our needs so there's no need to look through all
of the different choices in the main menu to find what you need they're already up in the
icon bar and this video has customized reports that suit our needs as the landlords bookkeeper
if you don't know any of these six things or you don't know how to create a file please
watch our videos about these topics on the very same website that you're watching this video I
put introduction to computer videos and basic introduction to QuickBooks videos and basic
QuickBooks videos that you can learn from just to gain a general sense of how QuickBooks works once
you do that you can then watch these videos and learn the specifics of how to manage a building
as a landlord now let's discuss the specific things that landlords need that others do not
first we have to put an account in the chart of accounts called unearned rental income this is
the account that will show the total accumulated deposits or rent payments in advance for future
rent services that the landlord owes to the tenant the type of account for unearned rental income is
accounts receivable type of account now remember it does not matter what type of account it is it
matters how the account shows up on the financial statements and it matters that the account helps
us keep track of the total money that we received from all tenants that we have not yet applied to
their future rent we also have to put an item on the items list called rent used and we have
to connect it to the rental income account this is because we have to ultimately make invoices
for rent that we earned and we have to put this item on the invoices we also have to make a rent
receipt document template from a customer credit memo because when a tenant pays rent in advance
they really have a credit balance and accounts receivable and they will want a document as proof
that they paid so a credit memo in QuickBooks can be changed to a rent receipt to satisfy
these conditions now before we set up everything let's take a look at what's already in the file
these shortcuts in the icon bar are everything a landlord needs and you don't have to go searching
through all of the different choices in the main menu to find what you need before icons
on the left or the only four transactions that a landlord would specifically need and they are in
order of how we will use them now we have two separators and then we have our reports you
probably learned in a previous video that the trial balance is the main report and that's the
one you would give to your accountant to do your taxes it has the accumulated totals of all the
accounts in the chart of accounts the journal is simply a list of every single transaction in the
order in which it was entered into the computer regardless of date so if you're putting in many
transactions and you forgot where you left off the journal is the one to open up to take a look
at now the specific things that I need to bring to your attention or the icons that say tenants
records and vendors the tenants records is really the customer center that you learned in a previous
video if you studied the basic introduction to QuickBooks all I did was save it as a shortcut
and change the label of the shortcut in the icon bar from customer center to tenants records if you
open it up you see I have already provided three customers on your customer list and I strongly
suggest that landlords put in the name this way if you put in the name this way you can
see the name of the apartment with the name of the tenant you could always alter the tenants
per our permanent records by double-clicking on a tenant and get going to the Edit customer
window you could put in more about their address which you already know but you could put in their
individual phone numbers maybe they have an email address or a website and things like that and you
can put any other additional information you need about that tenant in the Edit customer
window another place where you can put additional information about each tenant is the notes if I
click on Dave the tenant and I click notes I can click manage notes add a new note and I can date
and timestamp the note and then I can type in any specific interaction or any specific piece
of information that I want to remember about that tenant for example I will put wife is handicapped
and I want to put that and click OK so that when I choose Dave in the customer list I can be reminded
that his wife is handicapped and I won't make any inappropriate jokes these notes are also important
for things like when the tenant says that he'll pay you or she will pay you on a specific date in
the future or some other information that you need that's specific to that apartment or that tenant
you should also notice that the chart of accounts has a lot of typical accounts that most businesses
would need you might notice that it already has a rental income account because one would assume
that you would have at least one income account to record the money that comes in from customers
but it's not quite set up yet notice it has a out of common expenses prepared in advance and
a couple of current assets that would be typical for a business or a landlord okay you might notice
there's the vendor center up here that already has the names of companies and individuals whom
we pay for the services that the landlord needs to run the business the most interesting two reports
are the open invoice report and the tenant balance detail it's actually the customer balance detail
and I change the name but these two reports the open invoice and the tenant or customer balance
detail will be the reports that really show the financial events between the landlord and the
tenant and really explain who owes what money for when or what is owed back to of the tenant for
which payments and so on so let's start setting up the file for the accounts that we need let's
add unearned rental income to the accounts and the chart of accounts from the main menu click
lists chart of accounts from the bottom left click account new then at the bottom of the
add new account window click other account types and choose accounts receivable there is a brief
description here that explains why this type of account is appropriate for managing our tenants
when we click continue we get the opportunity to type in the name and we're going to type in on
earned rental income and this account will show up on the trial balance with the total money that we
owe to all tenants until they actually stay and use up their rent payments click Save and close
and now what now our chart of accounts is ready to go now let's add an item called rental fees
to the items list we're going to link or connect this item to rental income which is actually the
income account for rent that was actually earned so from the main menu click list item list in the
bottom left click item new now of course it's a service and the item name is exactly what was
said rental fees so rental fees will leave the rate blank because every tenant pays a different
monthly rent but the account that is affected when we put rental fees on an invoice will be
the income account rental income this rental income account represents truly what we earned
after the tenants stay click OK and now you have rental fees in the items list and finally we will
do the last step of the setup file for landlords let's make a rent receipt document template from
a credit memo from the main menu click customers create credit memo now make sure the ribbon is
showing and you click the formatting tab directly under the word formatting is the icon for manage
templates these are two credit memo templates that came automatically with QuickBooks click
on custom credit memo and then click OK when you get the basic customization window click in the
bottom-left additional customization now the only thing we really need to change is the word credit
memo showing up on the document on the screen and showing up in the top right when we print
the customer should not see the words credit memo they should see the words receipt so click in the
top field by the way make sure the header tab is chosen and in the very top field for the default
title change it to rent receipt now you might have to click OK several times until it takes click OK
click OK for the warning click OK again now click OK back in the basic customization window and here
we are your credit memo now says rent receipt and now when the tenants pay you you can print and
issue a document to them as proof of the amount that they paid and the document will say rent
receipt congratulations you all set up and ready to make your first landlord tenant transactions