BALANCE POINT
QuickBooks vs. Track/LiveRez
Best Practices for Accounting in Vacation Rental Management
When it comes to Vacation Rental Trust Accounting, managing accounting tasks can be a unique challenge. On top of having to manage your own books, you’re also entrusted to manage other people’s money as well as their homes and property. To help keep your books neatly organized, it is best to separate how you keep track of funds for your organization and others in different platforms. This post will cover how best to use traditional accounting platforms like QuickBooks and more specialized property management software (PMS) like Track or LiveRez in tandem to optimize your accounting processes and avoid duplication of entries.
QuickBooks for Overhead Costs:
QuickBooks is the go-to solution for managing the internal aspects of your vacation rental entity. It excels at handling overhead costs, including payroll, insurance, subscriptions, merchant fees, fixed assets, business loans, and more. By leveraging QuickBooks, you can effectively track and manage all financial aspects of your business, ensuring accurate and meaningful accounting processes.
PMS for Owner/Guest Transactions:
Your property management software is designed for recording trust account activity and to account for accurately processing advanced deposits from guests on reservations. This allows for funds to flow from your trust account to shareholders of said account such as owners, tax authorities, vendors, your entity, etc. at whatever point in time is specified within your PMS (on departure, arrival, booking, etc.).
Your PMS is ideal for processing owner reimbursable expenses, cleaners’ fees, lodging/sales tax, and even travel insurance in some cases. By utilizing your PMS for these transactions, you can ensure proper allocation and tracking of expenses, while maintaining a sufficient balance in the trust account to cover these costs.
Avoiding Duplication of Bookkeeping Entries:
To prevent duplication of entries in QuickBooks and your PMS, it is essential to establish a clear workflow and separation of duties between the two systems. Follow these best practices:
Trust Accounting in your PMS:
Ensure that all trust transactional data remains within your Property Management Software. Track and LiveRez serve as a reliable Trust Accounting platforms, allowing you to account for and reconcile trust-related transactions efficiently. By keeping the trust accounting separate from your operating accounting (QuickBooks), you maintain clean and accurate records in both systems.
Yearly Reconciliation:
At least once a year, usually at the end of your fiscal year (e.g., December 31), You should account for the trust account assets and liability balances from your PMS by posting a journal entry that ties out those year-end balances to your QuickBooks balance sheet. The assets should always equal the liabilities. This step ensures that your tax return accurately reflects all the accounts you manage.
Treating QuickBooks and your PMS as Separate Books:
It’s crucial to view QuickBooks and your property management software as two distinct sets of books to avoid confusion and maintain accurate records. Follow these guidelines:
Separate Bank Account Reconciliation:
All bank accounts should be regularly reconciled (typically monthly, but sometimes more often). Make sure your operating account(s) are reconciled within your operating accounting platform (QuickBooks) and your trust account(s) are reconciled within your trust accounting platform (PMS). Be sure to avoid reconciling the same accounts in both systems. This approach helps maintain the integrity of your financial data.
Credit Card Usage:
Do not include credit cards in your property management software. Instead, use your operating account to cover any owner reimbursable expenses made with a credit card. Establish a clear process to charge owners for these expenses and ensure reimbursement to avoid them becoming business expenses. We recommend reconciling all credit card to the credit card statements within QuickBooks as well.
Conclusion:
By understanding the specific strengths of QuickBooks and property management software, you can optimize your vacation rental management accounting processes. Utilize QuickBooks for overhead costs and Track/LiveRez for owner/guest transactions, ensuring a clear separation of duties between the two platforms. Follow best practices to avoid duplication of entries and reconcile the systems periodically. By implementing these strategies, you can streamline your accounting workflows and maintain accurate financial records for your vacation rental management company.
