QuickBooks – For Real Estate Transactions
QuickBooks is a very useful accounting software program used by many small business owners. If you own rental real estate property or have a business buying & selling real estate you may have wondered if QuickBooks would help you. Here are some ways that QuickBooks can benefit you if you are in the Real Estate industry:
Class Tracking – QuickBooks Pro has a feature called class tracking that can be turned on in the preferences section of the program. Class tracking allows you to tag income and expense items to a specific class, which in your case would be properties. For example, you could name the class using the street of your rental property or piece of property you want to sell. One class may be called 123 Main Street while the other may be called 45672 Pearl Street.
By using class tracking you can easily view reports that show the net profit of each individual property. For rental properties you can see which houses are generating the most money. For resale property you can see which ones yielded the biggest profits. You can also use the reports to determine where the biggest costs are for your rental properties and use the reports to determine if you want to keep the house as a rental unit or sell it.
Class tracking reports also save you time & money during tax season because it makes completing Schedule E a breeze for tax preparers.
Automated Invoicing – In QuickBooks you can set-up an invoice to automatically enter itself each month for each tenant so you can keep track of who owes you money. For example, if John Smith’s rent is $975 each month, you only have to create an invoice one time. Then you “memorize” the invoice and have it enter itself automatically each month on the first of the month. By automating your invoice process you will not have to wonder if you have invoiced all of your tenants. Invoices can also be emailed out in a batch once they are created.
Template for Selling Properties – You can set-up a journal entry template to use each time you sell a house in order to keep track of the gain or loss you made on the sale of the property. First you would “memorize” the transaction (but you would not enter it in automatically like invoicing). Later you would use the “memorized” transaction, changing the dollar amounts of the chart of account line items and the class (property name). Having the chart of accounts already set-up in the journal entry makes recording the transaction a lot easier, accurate, and consistent than if you recorded the transaction from scratch for each sale.
Pass Costs Onto Tenant – If you pay the utility bills for the rental units you can have your tenants reimburse you the costs. For example, let’s say you paid $500 for an electric bill on 123 Main Street and have two tenants. You want to charge $250 to tenant Bill and $250 to tenant Amy. When you enter the bill or write the check, you split the transaction and tag $250 to each tenant. In the bill or check, make sure there is a checkmark in the billable column. You can then modify the invoice that was automtically created by pressing the Add Time/Costs button on the invoice screen and selecting the cost to be reimbursed.
Those are just a few ways that QuickBooks could help if you work in the Real Estate industry.