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Property management invoice template for Support

hey this is Nick from income digs welcome to this tutorial we're talking all about QuickBooks online and how we can optimize the workflow for property management so a lot of you are property managers or you're a bookkeeper for a property manager and you're trying to figure out exactly how to manage everything within QuickBooks Online we're going to talk through a workflow today where we not only invoice our tenants those that are actually renting the apartments but we also can maintain balances for the owners okay and I'm going to show you how we can do that right within QuickBooks Online we'll probably have some follow-ups some nuances some other ways of doing this as follow-ups but right now we're going to deal with that exact workflow as we get into this today I want to remind you to check out our free chart of accounts download so if you want a chart of accounts that you can import into your QuickBooks online that is specific to real estate investing specific to Property Management download it for free at incom dig.com we have the link in the description there also check out our free Qbo mini camp so we Dive In Depth with uh over two hours of training where we go through the various fundamental processes that I use with my students all the time check that out as well but let's get into today's topic which is specifically Property Management workflow within QuickBooks online so what we're going to talk about today is a situation where we invoice tenants as well as maintain pay expenses for owners and maintain balances for owners so what makes this a little bit unique and confusing for a lot of us is the fact that we kind of have two customers right we have the tenant who's the actual person renting the apartment and we have the owner for whom we are managing the property okay so we have to kind of think about both of those and so what I've done is I've taken a lot of information from you my students my audience as far as what situation works for you and what you do and I'm trying to uh get a system and a process that works within QuickBooks and I think I've got a pretty good one and again we'll have some some follow-ups on this for some various different ways of doing it what we're going to do is invoice tenants we're going to pay expenses on behalf of the owners make sure that we Mark those as billable we're going to maintain owner balances and then eventually pay out our owners so when we do this we want to think about our customer hierarchy okay so this is my proposed customer hierarchy within QuickBooks Online we need to use definitely our tenants because we're going to be invoicing them okay so anybody you're invoicing needs to be listed as a customer I think it makes sense for them to be the very bottom the child level of the hierarchy probably with a property on top that is helpful for maintaining some structure and some organization and then finally the owner would be the top so that would be the parent level I'll show you that within QuickBooks thinking about our chart of accounts and our products and services we want to hold our tenants rent in owner funds payable something like that some kind of name like that not income so this is an other current liability so this says that like hey we received funds but it's not ours we owe it to our owners and we're going to pay that out eventually we're going to track expenses as billable so as we pay utilities as we pay for repairs we're going to mark them as billable so that we can invoice our owners as well okay and then we're also going to be tracking our property manager income so here is how the workflow will go we're going to create monthly recurring tenant invoices we're going to pay out our expenses as they're incurred make sure we mark them as billable our monthly recurring owner invoice as well we're going to charge our owners for the property management as well as billable charges any charges we've incurred and then we're going to create a monthly recurring owner credit where we say we owe you the funds that we've receed from our tenant and we're going to balance that out with a payout it's going to be nice and easy all right so let's see that in QuickBooks Online all right first thing I want to look at is our chart of accounts okay now I've done a lot of this work already so I'm just going to show you what I've done in setting this up and testing it and the first thing is our liability account so we go down to other current liabilities much like you would set up for security deposits and I passed it didn't I uh yeah much so he would set up for security deposits you're going to have something like this owner funds payable now I marked it liability uh just so we're we're sure about that so I have that excellent okay that's ready to go and I'm going to um I'm going to show you we got some invoices open already that we'll we'll look at um and the other thing we want to think about is our income so do you have Property Management income set up because we are property managers we need to get paid for that service so that should be an income line okay and then billable expenses income that should be something that's there by default within QuickBooks online if it's not there yet it's probably because you haven't yet turned on billable expenses so let's do that let me show you exactly how to do that go to accountant settings and then going into expenses right here uh Mark expenses as billable as well as track expenses by customer now here's where you would potentially have a markup for property managers rarely do I see markups being charged you could potentially do that though like if it's you know added effort for you to pay these expenses you might have an agreement with your owners where you are marking those expenses up that's up to you in your agreement in this case I'm going to keep that off okay but once we've turned that whole thing on to make expenses and items billable that billable expense income will show up within our chart of accounts let's look at our customer hierarchy so I'm going to go over here to customers and you see here right where I started Anvil properties I have um kind of an example of how it would be set up so here's my owner here's my property and then here's my tenants these are actual human beings who would need to pay me rent okay right below it I have another owner so I have Anvil properties up here I have a EAB properties down here below EAB properties I have two properties I have 122 Buffalo I have 123 Main Street okay I have two tenants Juliet and Olivia one at apartment a one at Apartment B you can see that we actually have balances we have some invoices open here as well okay so that's my customer hierarchy we also want to think about products and services and the main important aspect of our products and services is when we set up for example our 122 Buffalo Street Apartment A and B rent if we look at at how these are set up a few things here first of all I should probably indicate a rate on these go 950 for this one notice the income account it's not rental income it's owner funds payable it's that account we had set up in our chart of accounts okay we are receiving these funds but it's not our money yet it's a liability that we actually owe to our uh owners okay so we have that set up I'm just going to look here just adding rates to these okay so let's look at those invoices that we have here so we're going to invoice out our customer and receive payment okay now we could use QuickBooks Online to receive payment I suggest you do that if you don't have another way to do it or we can receive paper checks or cash whatever but either way we're going to at least use QuickBooks Online to indicate whether or not we have received payment uh or not okay so I'm going to look into these invoices okay so here's Apartment A Apartment B here are my invoices they're overdue now I've created all of these as of 21 2018 and I'm just doing this so I can draw up a balance sheet for you to demonstrate how it how it works but each of these invoices really straightforward we're just indicating here the date of the service 122 Buffalo Street Apartment B rent you can maybe put in the description monthly rent okay now I am indicating a class here as well if you have QuickBooks Online plus I kind of uh think you should do that and I'm going to show you why uh I'm going to drop a p&l shortly that's going to look really crazy when we use customer it's going to look really nice when we use class so if you can use both that's usually good I'd probably put in the customer email I'd probably allow them to pay me online and I'd save and send it to them okay now that's probably what I would typically do but let's just say I received a paper check payment okay so I'm going to receive payment here but before I do that let's see what this all looks like in our balance sheet okay so we're going to just Envision that the only thing this business has done so far is really just um issued those two invoices so if I run that balance sheet for this business the only thing that's on there right now are those two invoices and you see that it shows up as accounts receivable for me my property management company and it shows us owner funds payable as a liability okay great so now what I could do I can display columns by customers this is where it starts getting a little crazy and I can see that for EAB properties I have 122 Buffalo Street then I have Apartment A Apartment B total for 122 Buffalo Street total for EAB property so I have a total due to EAB properties of $1,800 that's great what I'd probably do instead of doing it displayed like this I'd probably just filter it down I'll get into that later when we talk about reporting all right so my invoices are right there they're ready to go let's receive payments for those in invoices so I can go to I don't know why they're not showing as overdue I'm I'm going to receive payment for Juliet and for Olivia so let's receive this payment and when I do money's going to go into my checking account I can indicate the date that it's paid looks good I'm going to save and close that so what does that do that will decrease our accounts receivable and it will increase our cash in our bank account really simple okay so I'll show you that in the balance sheet so far all I've done is invoice tenants and receive payments for those invoices I don't know why some of these save reports are not really working these days all right so see here that pretty much what happened was it moved from accounts receivable to accounts or to my checking account I still owe the owner that 1,800 I have not yet charged the owner for Property Management Services okay we will do that let me save this all right excellent so now what do we do throughout the rest of the month we incur expenses on behalf of the owner okay so that can happen either through bank transactions so we could just as they come through our bank we're submitting the payment we have our credit card set up for utilities or something like that okay we could very easily take an expense like this and I can indicate okay it's for repairs and maintenance we definitely would want to indicate who the who the property is so let's say it's for 122 Buffalo maybe we don't know what unit is that's actually really common that's why this hierarchy is important and we want to have the property there we can indicate 122 Buffalo I'd probably put the class in there as well and here's the important part billable right there now because this transactions the 2023 it's not going to do us any good on my reporting so I'm going to create a manual expense okay so this would just be normal day-to-day of your property management company you're going through and you're paying expenses on behalf of your owner of course you're going to make sure that you have a really good Management in place and on how to understand what expenses are for what property what owners so I'm going to indicate my payment date and here I'm going to say um repairs and maintenance toilet repair okay $250 billable 122 Buffalo okay and class 122 Buffalo let's save and close that okay so you're going to incur those expenses now what will happen is toward the end of the month what you want to do is you want to invoice your owner for property management fees and any billable expenses okay so when we go to our customers what we can do there is we say you know what for 122 Buffalo Street you owe me some Property Management fees right so let's do uh a new invoice for EAB property so I can do a new invoice and actually I'll probably do it by the property it it depends so you could do you could do one invoice right here and include everything for these properties or you could do separate ones for each property let's do it by property here so here I'm going to do an invoice to 122 Buffalo Street and let's just say that this is due at the end of February okay so at the end of February I'm going to charge for property management okay and my property management is all right $950 for apartment a I'm going to charge 6% of that as well as 6% of 850 okay so look at that invoice nice and neat right I'm going to save this for a second and I'm going to turn off send later just for now okay notice my billable charges are up here I'm going to deal with that separately but I'm going to click make recurring real fast all right and so what I want you to do and you're going want to do this with with your tenants as well is every month we'll do a recurring owner invoice 122 Buffalo okay I want to create it maybe 10 days in advance and it's going to be on monthly on the last the last day of every month okay and we'll start it because I'm recording this one in February I'm going to start it in March okay service date unfortunately you got to get rid of this this won't dynamically update so you have to get rid of that and here's what's crucial we're going to click include unbuild charges okay I'm just going to save that template so that's there it's ready for me now let's go back to that invoice that I have for 122 Buffalo street that $108 if I click into this this specific invoice I would have wanted to add to this the billable charge now on my recurring template that'll automatically happen this $250 will automatically get added but when I click it here it's going to be added so this owner owes me $358 on this invoice okay but as I'm guess saying you're you're realizing we owe the owner $1,800 right how do we know that well we can go to our reports okay and we probably would want to set up a reporting structure like this where we take our balance sheet for the year okay and I probably want to customize this and I want to filter it by all my specific customers so in this case I'm going to do it by 122 for EAB properties okay and I going run that whole thing and that tells me that I owe this customer $1,800 save customization I'm just going to do this for um balance sheet EAB props okay so that tells me that I owe I owe this owner $1,800 so I need to write a credit memo to that owner okay now that is also going to be something we set up as recurring but right now I'm just going to go into my customer and I'm going to do this one manually okay so for 122 Buffalo Street I'm going to create a let me go right into it I'm going to do right here a credit memo so I owe this customer this owner of mine I owe apartment a rent and Apartment B rent right okay and if i s let me just I can't even can't just save it I'm going to go back into this I'm going to make this recurring as well every single month I'm going to owe this right so why don't I make this recurring okay so this is my 122 Buffalo credit memo I'll have it create 10 days in advance okay monthly Let's Have It Go on the or yeah let's go last day every month and we're going to do this as of March as well so now this is also recurring okay so now you can see that I have an open balance of negative 1,442 now this everything that I've done so far will automatically happen monthly okay now all I have to do is incur billable charges and mark them as billable I guess the last thing thing that I haven't done yet is make these invoices to Olivia and Juliet so let's just do that let's make these um make these recurring as well so if we can set up almost all of these to be recurring so 122 Buffalo Juliet this is going to be on the first day of every month okay we'll start this in on March 1st okay save template and we're going to do the same thing for Olivia did I do that uh let me just look go to my recurring transactions yeah I have Juliet in there I don't have Olivia yet all right so everything's recurring so we have a recurring invoice to all of our tenants we have a recurring invoice to our owner okay that we can edit and is going to include unbuild charges and we have a recurring credit memo okay so that's going to do almost all the work for us the last thing we have to do is just pay out our owner all right so this looks good we'll start it March 1 save okay so now everything set up is recurring right if I go to my 122 Buffalo I see that I have 1,442 so all I need to do every month okay now this could be recurring as well but probably not what you'd want to do is you'd look at this open balance we're just going to do a new expense where it's our payout okay we're going to pay out that EAB properties 122 Buffalo from this account we're going to pay them out and I just forgot the amount so sorry about that 1442 okay so sorry one more time we're going to pay them out 1442 last of the month here and this is going to be accounts receivable 1442 put in the class I could put in my customer as well save and close this okay now all I need to do here this is an unapplied credit memo we have a few things that are unapplied I'm going to take this invoice and I got this payment here I'm going to go view payment and here all I got to do is indicate this expenses well well what I'm doing here is my 358 plus my 1442 gives me a balance of zero for this owner so I'm writing the check for 1442 and what I've done is I've recognized my income I'm going to show you this on the report shortly recognize the income all along the way I recognize that I owed the owner money and I'm maintaining the owner balance over here so because we have this hierarchy maintained right at every level within our customers we're able to see what their balances are so notice now they're all zeros so as I invoice my tenants those populate and as I owe my my owners money those go down as well so I have that balance so with the recurring invoices to our tenants the recurring invoice to our owner and then the payouts we're able to do all of this really really quickly so let's go to my reports see exactly for EAB props how things are going okay so I have some cash and checking my account's receivable zeroed out I don't know the owner or anything anymore and I have a net income of $108 what's that net income there's my billable expense charge here's my property management income here's the repairs and maintenance that I had to pay for and I have a net income of $18 okay so I get my p&l looking great for my company and my owner is getting paid out nice and neat as well and you can for your owner make some really nice statements as well so we can take EAB properties as a whole and for that create a statement okay so I can print or I can print or preview this just to see what it's going to look like and here you see there's my rent going up there's my invoice and there's my credit memo total received is $358 okay so we're kind of maintaining that over time all right so we can play with those as well we can also do an open we do a balance forward let me see what these different ones look like yeah so here we can see here's the invoice here's the payment here's the credit memo here's the expenses so those all kind of come through all right so this is one way again not like that it's not a little bit complicated but this is one way that we can maintain our accounts receivable for our tenants as well as maintaining balances for our owners all within QuickBooks online so if we maintain this customer hierarchy owner property tenants we set up our chart of accounts so that we're not recognizing income on the rent received but we're holding that to pay back to our owners we're incurring billable expenses and then we're using kind of a mix of recurring templates so that we have invoicing going out to our owners with credit memos and we have a net that we give to them through a monthly check or expense okay so check that out let me know what your thoughts are on it give it a try and put more questions and comments in here what we're going to do on some of the future videos we're going to talk about managing this all kind of yourself so if you're your own property manager how you might do something similar to this within QuickBooks Online all right thanks so much for watching this check out as I mentioned all the free resources available at incom dig.com chart of accounts Qbo miniamp check out our endtoend course real estate accounting boot camp we have so much so much content available for you there and let me know what you want to see next okay your questions your comments feed my next videos until next time enjoy this tutorial on QuickBooks online and I'll see you on the next video