My property management company manages different properties for various people. We collect rent from tenants but that rent is not considered our income because we have to pay it out to the people we manage property from. However we do take a percentage of the rent as income for our company as a property management fee. We also take money out of the rent we collect to pay for maintenance on those properties. My problem is this: When I am doing my bookkeeping, what account should I be putting rent in because it isn't an income? I have been entering it in accounts receivable in a subaccount titled rents receivable - then I take the rent out of accounts payable. But this doesn't show up correctly on the balance sheet because it shows my total assets as the total rent received even though it isn't income. I need a solution so that my bookkeeping is easy to understand and correctly entered in quickbooks.

I will try to explain this using an example.

Let's say for the month of January you collect $100 from a tenant. Of that, you get to keep 10% as a service charge, or $10. The remaining 90 you must then send to the client.

So your JE upon collection would be:
Dr. Cash 100
Cr. Revenue 10
Cr. Accounts Payable 90

Now, let's say tomorrow you have a 20 expense. So, your JE would be:
Dr. Accounts Payable 20
Cr. Cash 20

Next week you pay the client. You owed them 90, less the 20, you now owe them 70.

You need to follow the real estate laws of your state and establish the correct ESCROW/CLIENT TRUST account that does NOT contain any monies belonging to the PM business.

Forget Quickbooks - it is for landlords with multiple properties. You should be using PROMAS which is simple and already has the reports and mechanics specific to fee property management... You might want to check out their website and the Tech Support is awesome!

Don't forget your 1099s for your owners by the 31st of Jan!