Are you using TurboTenant Accounting to keep your books as a third-party property manager but need help figuring out how to get started? You're in the right place! With just a few steps, you can use TurboTenant Accounting to create a P&L statement for your property management business and the properties and owners you manage.

First, a small disclaimer: TurboTenant Accounting is an accounting software that does not provide a complete suite of professional property management tools. For example, at this time, TurboTenant Accounting does not do the following:

Let's now look at how you can differentiate between your property management business and your customers' rental businesses, how to appropriately update your chart of accounts, and discuss transaction entry and reporting.

A sub-portfolio is an additional reporting layer used for groups of properties or legal entities. Setting up sub-portfolios allows you to delineate the separation between the different businesses in your portfolio and pull reports for them.

You will create a sub-portfolio for your property management business AND one for each owner, then place properties into the appropriate owner's sub-portfolio. Your property management company's sub-portfolio will not include any properties; it will only serve as the reporting layer.

The TurboTenant Accounting default chart of accounts can be added to as needed. Access and update the chart of accounts from the same right-side menu as above by selecting the Chart of Accounts page and clicking +Add Account in the upper-right corner.

In a property management environment, you should add an equity sub-account for each owner/sub-portfolio so that we can clearly differentiate contributions and distributions by owner. You'll also want to include an equity account for the property management business itself. There should be a unique equity account for each sub-portfolio. Set these up as sub-accounts of the default 'Owner Funds' equity account.

If you're using TurboTenant Accounting as a property manager and set up sub-accounts of Owner Funds, no transaction should be booked to the total Owner Funds equity account. Instead, all transactions should be booked to the owner's sub-accounts of Owner Funds for the most accuracy and clarity.

Also, you should add any additional revenue or expense accounts that you may want at this time. At a minimum, you'll need a new, top-level (not sub-account) revenue account for the property management company's revenue. There is already a default expense account titled 'Management Fees,' so you can create your new account as 'Management Revenue' or something similar.

You may also add additional expense accounts for increased reporting detail to your owners or your property management company's expenses. The default expense accounts in TurboTenant Accounting exactly match the IRS Schedule E.

Book rents received and expenses incurred on behalf of the property owner to the appropriate property. Ensure the Transaction Scope field is set to 'Property/Unit' and select the property associated with the transaction. This will be the majority of transactions (rents, expenses, etc.) and will populate the Net Income and Owner Statement reports. If rent is paid electronically on TurboTenant, the applicable property and unit information will automatically populate in TurboTenant Accounting.

If the transaction should be on the property's profit and loss statement, it must be booked to the property in TurboTenant Accounting. While you are facilitating these income and expense transactions, they 'belong' to the property/owner, not to your property management company.

Please have a look below for more discussion on property management fees.

Book distributions to your owners using the 'Owner Distribution' transaction type, selecting the appropriate owner equity account you created above. If you send individual distributions for each property, set the transaction scope to 'Property/Unit.'

If you send a single aggregated distribution per owner, set the transaction scope to 'Sub-portfolio' and select the appropriate owner's sub-portfolio. As above, select the appropriate owner equity account as the 'Distributed To' account.

You can use the Owner Statement report, filtered to the appropriate date range and sub-portfolio, for reporting to your owners. The Owner Statement report will show all the revenues and expenses from all of that owner's properties and the beginning Owner Funds balances and distribution amounts.

Additional reports like the Net Income by Property may also be helpful to your owners and can be pulled by setting the report scope to an owner's sub-portfolio.

You can use the Net Income report filtered to the property management company's sub-portfolio to report on the property management company.

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