Quickbooks And Advance Rental Payments
Hi
Used excel for first property, easy.
Now expanded to 2 houses so accountant persuaded me to try Quickbooks. Seems e=xcellent, produces lovely Sales Receipts etc. Problem is how to deal with Advance Rental Payments from last year when using Cash Basis. Has anyone smarter than me cracked the problem?
Bruce
Scotland, but investing in FL.
Work with your accountant to set up your Chart of Accounts to handle prepaid rent (advance rent).
On a cash basis, rent received last year is taxable in the year received. For example, your tenant pays the January rent in December. This advance payment is taxable rental income for the year ending December 31, even though the rent is not "earned" until the next tax year.
If your accountant is pushing you to QuickBooks, ask him/her if there is an established chart of accounts for you to use. The Chart of Accounts for multiple properties is not an easy task, and the generic COA provided by QuickBooks needs some tailoring. Ask your accountant to work with you to get the COA set up correctly from the beginning.
Unless you are committed to QuickBooks, I don't see any reason why you could not continue to use your Excel spreadsheets for your second property -- just use a separate income and expense worksheet for each property. accountant should be willing to help you work through these questions.
Thanks Dave
I will try and stick with Quickbooks. Your advice is very helpful. The secret seems to be getting the right chart of accounts to start with. Once that's done the rest should be easier than excel. And it doesn't help that US accounting terms are different to UK ones.
The QB COA is not very good, I will adapt with my CPA, and maybe also see if there is one already available on the net. Thanks again