Property Management - rent collected and transfered to owner minus fee

Accounting
1

Our company collects rents on behalf of a third party. We pay for any repairs to the properties. Every quarter we pay over to the third party the rent that we have collected minus the cost of any repairs, and minus our management fee. Please could anyone tell me how to correctly record this in QF.
thank you

2

I would imagine you would have:

  • Rent Income as an invoice
  • Repairs as purchase invoices
  • Rent payable to 3rd party as purchase invoice

Effectively:
Invoice minus repairs minus rent payed out = profit (subject to other expenses)

Although, I don’t work in that industry, so maybe someone who does could advise of a better option

3

Depending on how many clients you have you could also set up a holding account for each client, or use project tagging to keep track of the balance of each account.

1 Like
4

Thanks for your assistance, My concern is whether the rent is classed as income to the company because we don’t keep it? I have always created an invoice for the management fee and the cost of repairs. So is that the true income for the company? If I create an invoice for the management fee and an invoice for the rent won’t I be duplicating income??? Or in your example (above if I’m understanding it correctly) I don’t actually create an invoice to the third party for the management fee, but instead create a purchase invoice for the balance of rent due to the third party. How do I then provide the third party with an invoice for our services? I’m still a little confused :s… How would paypal or credit card companies account for their transactions if they were using QF?

5

You don’t get to keep much of what you receive anyway! It wouldn’t make any difference as the profit/loss is the key figure so that would be the same whether you ran it through the accounts or not.

You can play with the order of doing things to suit your needs, as long as the profit/loss on the overall is correct. So you could simply do as per the example above and just pay the rent minus repairs and fees to the client or you could pay the client the rent in full and then invoice them for the repairs and fees. Your final balance & profit/loss will be the same either way.

6

thank you for your help :smile: