accounting issues

[Jessica Foy]

I'm just trying to find out some accounting info about my rental property. I have one of my employees renting a house from me, we have worked out an agreement to have them pay partial rent each paycheck that I take out of his payroll. My accountant was looking at my books and told me that what i am doing is wrong. He told me that for accounting purposes rent needs to be handed in by the first of each month, and also that it should be in the form of a check not through direct deposit. My question is, is he right? Is what we've been doing possibly damaging the books and could it cause accounting problems?

[Mitch Kronowit]

It just sounds like he doesn't want to be inconvenienced with an unorthodox payment arrangement. The rent needs to be paid in accordance with the lease agreement, not simply the way your accountant is used to doing it. We collect rent from one of our properties via DD and it hasn't been an issue at all.

I would be more concerned about how you would collect rent if you had to terminate this employee for whatever reason. Obviously, any tenant's job loss is a cause for concern, but without a stream of rent checks coming your way, I fear this employee could claim in a court of law he hadn't been paying any rent (it was simply in exchange for his work). Probably not a big deal, I just think it could get messy if things went south.