Accounting for Real Estate Agents

As a Realtor  your paychecks completely depend on your abilities to sell a house. Unlike others types of employees who receive steady paychecks, Realtor paychecks fluctuate wildly from each sale. For this reason, managing your finances is a paramount importance. 

The major question you may ask is what financial software should you use? This should be your second question, your first question to ask is if you are a independent contractor or employee. 

If you are an employee for your brokerage, then you can use any time of personal finance software to manage your money. I would suggest YNAB for its budgeting capabilities read more here, however, if you need to track expenses for tax purposes then using Quicken Premier/Deluxe would be best. 

Independent contractors should aim use QuickBooks Pro or QuickBooks Online Essentials. These programs help make tax season a breeze and will reduce the number of times your accountant rolls their eyes when you come in to have your taxes done. While Quicken does handle businesses, QuickBooks will place your taxes in a format that your account would be familiar with, namely using P/L statements, Balance sheets, and other business reports that accountants use for tax filing. 

QuickBooks has a robust tax line mapping compared to Quicken, and it is solely a business accounting program unlike Quicken home and business. If cost is something you are worried about and you also need a mobile solution. QuickBooks Online Essentials will give your the tax reports, mobility, and excellent money management for less than $30 dollars per month.

If you have any questions about setting up your QuickBooks company file or deciding which program to use, leave a comment!

How To Track Equipment Rentals In Quickbooks

Some companies expand their revenue streams by renting out equipment to others. As some business owners may have found out, tracking of rentals and properly accounting for the money they generate is a tedious task. The goal is to show you two ways to track rentals using QuickBooks and QuickBooks Point of Sale.

QuickBooks Only Method

QuickBooks does not have a specific area or tool that allows you to track rentals; however, do not let this stop you.

1. Identify all the equipment you will rent out.
2. Enter the equipment as non-inventory items in QuickBooks
3. Setup the individual equipment names as Other Names
4. Use timesheets to track the rental/reservations
5. Mark the time entries as billable and then create an invoice for billable expenses.

QuickBooks Point of Sale Method

Using QuickBooks POS to track rentals is a lot easier than using QuickBooks. QuickBooks Point of Sale is able to use deposits and set up specific items and fees that can be adjusted on the fly instead of QuickBooks.

1. Identify the equipment you will rent out.
2. Create an inventory item for the equipment.
3. Set the cost to zero, the price to zero, and the quantity to the number of units you have to rent out.
4. Create a non-inventory item named Deposit on Equipment make the price zero
5. Repeat the process above but name the item Rental Fee.
6. When a customer rents the item, create a receipt with the inventory item on the first line of the sales receipt.
7. On the same receipt, Deposit on Equipment item will be the next item you add. The inventory item (the rental) will be 0 dollars, while the Deposit on Equipment will have the amount you are charging for the deposit.
8. Record the receipt, take the payment using standard payment methods.
9. Track the equipment using either a spreadsheet or another process.
10. When the item is returned, locate the receipt and reverse it. This will create a refund for the customer. If the deposit was done using a credit card, the card will be automatically refunded. This process places the rented item back into inventory.
11. Create a new receipt using the non-inventory item Rental Fee and enter the amount for the rental charge.

It may be wise to track rental equipment as a fixed asset in QuickBooks so you can depreciate it for tax purposes. Please speak with your accountant about this.

How to Use QuickBooks to Track Real Estate Properties

Accurate record keeping helps you to see how well your company is doing, but also is a way to bring in more investors or get loans from banks. How do you track real estate in QuickBooks? Specifically, how do you track properties that are being leased out to tenants?

Using classes to track expenses and income for properties is a great way to manage your business. Here is how you could setup your classes.

Tracking invoices, bills, even line items using classes will help generate specific reports that can help an investor. Classes allow a user to see P/L (Premier can show balance sheet for classes) for each class, this can be invaluable for the investor who would like to see which property is profitable and which isn’t. This is a great way to track property if you are a property manager or you manage property for others. Follow this template to see how to setup your class list:

Name of Owner of Property:

Address of Property:

Unit 1 (2nd floor etc...)

Unit 2

OR

Address of Property:

Unit 1

Unit 2

Setting up your customer list also allows you to pull additional reports and helps during tax time. If you rent properties out, you can structure your customer list like this:

Name Of Tenant:

Address of Property

OR

Name of Owner:

Address Of Property:

Name of Tenant and Unit/Floor #

Vacant and Unit/Floor #

Address of Property:

Name of Tenant

Vacant (this tracks what is spent to maintain house when vacant)

It all depends on your personal preference. Please consult with your accountant to determine what tax information you need to record and track. Using Jobs and Classes are sure fire ways to improve accounting and managing of your company’s finances.