DIY landlords are not accountants

[Jeff Gates]

Most DIY landlords are not accountants; however they would like their financial data accurate. How can the software communicate debit and credit to the non accounts?

[Account Closed]

QuickBooks was designed for the Non-Accountant small business owner and is truly user friendly.

You don't need to know Debits and Credits because QuickBooks does all this for you behind the scenes.   

However, until some one teaches you how to do anything in life, one never knows how to do anything in life one hundred percent, at least by themselves.  

So this is a concept to help you out.  

You have to think of QuickBooks as your paper and pencil. 

If you sat down at the table you would bring out your paper and pencil and begin to list all your properties and how much rent you would get from them to see how much income you would make per property and for all your properties together, giving you a total income for everything per month.

In QuickBooks your paper is your computer screen.  And QuickBooks does everything basically in outline form. So you are going to have a lot of indenting to do when you enter your data into QuickBooks.  

But in order to indent you need to know the words QuickBooks uses to allow you to indent and to see your reports in outline form and these words are as follows:

• Sub-Class   (a word for indenting in the Class section of QuickBooks)
• Job (A word to indent in the Customer Center)
• Sub-Account (A word to indent in the Chart of Accounts

Now the reason why QuickBooks uses these words for us to indent is because QuickBooks was first designed for the Building Industry, and Retail.  Therefore when they had a Customer, they needed to list what type of job they would be doing for this customer.  A kitchen rehab job, Windows, etc.  As much as QuickBooks as evolved in being user friendly, they have not come to the point yet, where we are allowed to customized the word Customer to Properties, or job to Tenants.  One day perhaps they will implement this. 

So let's list our properties as a class in the Class Feature of QuickBooks (just as we did on paper) to see what properties we own.  

The next thing we will do is list the properties again as the Customer in the Customer Center, because we need our rental property to be the ANCHOR that enables us to know (at a glance) where this tenant lives.  So we make our Property the Header (The customer) and then indent the tenant who lives there by making it a job of the rental property)  (See sample below)

So we listed all of our properties as a Class and then again as a Customer and made the tenants a job of the rental properties in the Customer Center and the amount of rent for each property (this is done through an Invoice)

So now, just like on paper, we have created a list of our properties, the tenants who live there and how much rent we will get for each property.  

So let's take a look at how this will look in QuickBooks.

Classes = a list of your properties  

          8252 Wisconsin Street Apartments  (Header)  (Class)

                 Unit 1   (sub class)  of the apartment building  (indenting)

                 Unit 2 (sub class)  of the apartment building   (Indenting)

You can see that the Building is the header and the units inside the building is a sub class.  Just another word for indenting. 

If you had single family homes you would just list them as headers with no sub class.

15333 Evergreen Street

17148 Braile Avenue

1645 Jeffrey Lane

Customer Center: 

            8252 Wisconsin Street Apartments  Customer = Header = rental property

                Unit 1 (Job of the building)  (indenting)

                          Teresa Williams    (tenant- she is a job of the unit) (job=indenting)

                Unit 2 (job of the building)

                          Brian Matthews (tenant- he is a job of the unit)  (word for indenting)

15333 Evergreen Street (Header) Customer = the building SFH

                            Michelle Liverpool   (job of the building)   (Indenting)

               17148 Braile Avenue   (Header)  Customer = the building

                            Kathryn Grant  (job of the building)   (word for indenting)

Chart of Accounts= sub account (indenting)

              Security Deposits   (main account)

                         Teresa Williams  (sub account)

                          Brian Matthews  (sub account

                          Michelle Liverpool (sub account)

                          Kathryn Grant (sub account

See all we are doing is listing and indenting.  QuickBooks does the rest for you. Ya just have to get used to the indenting words, and understand that you are just doing everything in a computer that would normally you would do on paper. But QuickBooks will calculate everything for you.

Three major things to know about in QuickBooks to obtain the facts you want to obtain is the 

• The Chart of Accounts (Accounts used to report your taxes to the IRS)
• Profit and Loss Report   (A Report that tells you where you stand financially)
• Balance Sheet (A report that tells you your net worth TODAY)

These three Reports affect each other. So even though QuickBooks is easy to use, you must be very accurate when you enter in your data.  Just like if you transpose a figure on paper, you will have bad results, well this is the same thing in QuickBooks.  Make a mistake and you will have bad results. So don't be careless and take your time, whether keeping track of your finances on paper or in QuickBooks.

So that is my advice to you. Hopes this helps. 

Nancy Neville