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