Accounting for deduction of management fee on landlord statement

Hi, I’ve set up QF to use as a private individual with a small portfolio that is managed by an agent. As many other people I receive a statement each month which details the rental income less the fee and that is the money I receive and I just need to account for money in and money out and make sure it’s coded correctly.

I’ve read a lot of articles and it all seems a bit complex talking about holding accounts etc. What I would prefer to do is have the recurring invoice for the rent and a separate line deduction on that invoice for the fee.
I’ve gone into the Chart of Accounts and the settings for the nominal code of 7020 which will allow it to be shown on invoices.

The question is can I do that? will it show the correct information to the accountant?
Just trying to keep things simple for me.

Hello @Dave-Bell

The holding account is the best way to process this.

Think of the holding account as the agent

  • They Invoice the Tennant (Sales Invoice to Tennant)
  • The tenant pays them (Payment made to Holding account)
  • They deduct their fee (Purchase invoice on the Holding account)
  • They Pay you the difference (bank transfer from Holding account to Your bank)

If there’s no VAT involved, and the “sales invoice” documents you prepare in QuickFile are not going to be seen directly by the tenants, then yes, what you describe would produce an equivalent P&L report to what you’d get with the holding account method.

The dashboard totals you see for sales and purchases would be inaccurate because those are derived from the sale/purchase invoices, so the dashboard would give the net (full rent minus agent commission) as sales and zero purchases rather than showing the full rent on the sales side and the commission on the purchase side, but the nominal account values on the profit and loss report would be correct.

If you were VAT registered, or if you send your QuickFile sales invoices to the tenant, then you’d have to use the proper holding account method.

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