Chicago, IL · Member since 2018 · 8 posts · 0 votes
Hey all
We are starting strs with Airbnb being our primary income source currently.
For you airbnbers, when does airbnb pay the owner or the rental property? At time of booking, some other in the middle or when they stay?
That ties into my bookkeeping question. For all you bookkeeping aficionados, do you keep books on an accrual or cash basis and what's the justification for either or?
Bronx, NY · Member since 2016 · 41 posts · 9 votes
7y
@Amar P. There are numerous reasons to use cash or accrual basis when doing your books. Many people choose to go the cash method route because it is much more simple, but there are drawbacks to using either method.
With regard to STRs, when using cash basis, you don't really get a good picture of how your business is doing and prepaid expenses can make your financial reports look really inconsistent; large income/expenses one month, then very little income/expenses in another. The accrual method of accounting helps smooth income and expenses out and provides a clearer picture of how your business is doing, which makes it easier for you to come up with processes to improve it. The downside to using the accrual method is it can be confusing if you're just starting out using it.
Investor · Jacksonville Beach, FL | NYC | Tamarindo Costa Rica · Member since 2014 · 182 posts · 130 votes
7y
@Amar P. they release your payment 1 day after the check-in, then the bank transfer takes a couple of days. They are apparently piloting a program that will allow you to receive half payment earlier for a 1% fee.
Bronx, NY · Member since 2016 · 41 posts · 9 votes
7y
@Amar P. There are numerous reasons to use cash or accrual basis when doing your books. Many people choose to go the cash method route because it is much more simple, but there are drawbacks to using either method.
With regard to STRs, when using cash basis, you don't really get a good picture of how your business is doing and prepaid expenses can make your financial reports look really inconsistent; large income/expenses one month, then very little income/expenses in another. The accrual method of accounting helps smooth income and expenses out and provides a clearer picture of how your business is doing, which makes it easier for you to come up with processes to improve it. The downside to using the accrual method is it can be confusing if you're just starting out using it.
Rental Property Investor · Long Island City, NY · Member since 2018 · 82 posts · 18 votes
7y
It is your choice to "Bookkeep" your record in any way you like to be honest. Please note that when you file tax return the numbers you book in any accounting software could be different in the actual tax return. Because in tax law, some expenses can only be recognized for 50% and sometimes none. Accountants will do everything for you at the end of year when you file your tax return.
What you should be careful is the consistency of your bookkeeping whether you book in accrual basis or cash basis otherwise your accountant will be confused when he or she reviews your book at the end of year at filing your tax return.
If you are familiar with accrual basis accounting, maybe it is a good idea to book it accordingly because accrual basis is better to monitor the performance which is profit and loss of your business monthly. If it is cash basis, the book does not really show accurate information such as the checks you actually sent out but not hit your bank, the insurance you paid for one year but it is expensed at one shot at the time, you receive invoices from your vendors but those are not recorded as your payable.
With that said, if you are "not" familiar with accrual basis accounting, you should just book in cash basis because it will be easier for accountant to find out what is correct and what is not.
Real Estate Consultant · Norfolk, VA · Member since 2017 · 345 posts · 201 votes
7y
@Amar P. Would it be nice to have both? YOu have accrual to analyze your business and cash for tax purposes. For the income side, the way I would set it up is by creating an invoice for every booking (that is your accrual) and once you received the payment from Airbnb (that's the cash method), you can apply the payment to the invoice. For the expense side, I would enter the bills, then oay. With this setup you can run either accrual or cash method reports with just a click of a button (I know QBO has the option).
If you are using another platform (ie. VRBO, Booking.com) you can create a product for each, that way you can also keep track on how much booking you get for each platform.
Accountant · Richboro - Philadelphia, PA · Member since 2008 · 901 posts · 246 votes
7y
Start with where you are listing your properties to rent? Is it only Airbnb? Each listing platform has different rules on how the payment is distributed. On top of it the rules for each charge, when and if it is refundable etc? Where are you going to track tenant balances. It is not only the agreement made with the listing platforms but what is your agreement with the tenant. All this comes in play with building your process, procedure and setup to record them in your books.