How Do You Handle Rent Collection & Payouts for Accurate Accounting?

[Nadir M.]

Property managers, how do you collect rent from tenants, keep your management fee, and send the remainder to the owner without it reflecting as if you received the full rental income in your bank account?

Are you using a specific property management software to handle this automatically, or do you have a different system in place to ensure accurate tax reporting?

Would love to hear what’sworking for you!

Thanks!

[Drew Sygit]

@Nadir M. you would show 100% of whatever you collected on behalf of an owner.

Of course, if tenant pays via credit card, you would NOT include the credit card fees, because you did not receive them.

From the funds in your OPERATING account, you would pay any expenses on behalf of the owner, including your management fees - which you woul transfer to your PMC account.

Owner will be paid from Operating account.

Your vendors (office expenses, auto, etc) would be paid from your PMC account.

Year end, you are require by IRS to send a 1099 with GROSS amount collected on behalf of owner. Owner will need an Annual Owner Statement from your acconting system, reflecting those gross collected amounts and all expenses, including your management fees. It's up to their tax professional on how to present that info on their tax returns.