[GNC] GnuCash for a Letting Agency (holding client money)

[Adrien Monteleone]

Oli,

Welcome to GnuCash!

As for setting up separate accounts for each property, that’s up to you. (some people even setup separate books for each) You can use the Description, Notes, or Memo lines for specifying a property as well and you can filter registers and run reports based off those fields, thus, you can find out where money is coming from (or also going to) based on the specific property even without using separate accounts.

You mention having them as separate assets, but are they *your* assets? If there is a landlord, I’d say those properties are owned by that individual, not you. Thus, they aren’t your assets. (but they are a source of revenue)

You can certainly have separate revenue accounts for each property if you like, but again, that might be overkill. It depends on how many properties you’re dealing with.

As for handling the full rent, you can do this on an invoice, or with a combination of invoices and manual transactions. Which path you take would likely depend on if you actually invoice the tenant or not.

You can have the following line items on your invoice:

Revenue:Agency Fees 	£100
Liabilities:Rent Owing 	£900


This will create the following transaction:

Dr. Assets:Accounts Receivable		£1000
Cr. Revenue:Agency Fees				£100
Cr. Liabilities:Rent Owing			£900		


When the tenant pays you, and you mark the invoice paid, this will be the result:

Dr. Assets:Checking:Rental Escrow	£1000
Cr. Assets:Accounts Receivable			£1000


Then when you pay the landlord their portion:

Dr. Liabilities:Rent Owing		£900
Cr. Assets:Checking:Rental Escrow		£900


And when you transfer money to your operating account:

Dr. Assets:Checking:Operations		£100
Cr. Assets:Checking:Rental Escrow		£100

Of course, those last two can be aggregated across many properties. You want to reflect the real world transaction as closely as possible.

Exactly how you handle the invoicing would depend on *who* your customer is, the tenant? or the Landlord? (I’d say it is the landlord since you’re providing them the service, but then you’ll have to think carefully about how you want to track rents due from, and paid by, tenants) You might even be able to treat both as customers if you handle it carefully.

I would definitely *not* handle the pass-through rent to the landlord as a loan. It *is* a liability, similar to how sales taxes are generally handled. It isn’t your money. You’re just facilitating the collection of it for the landlord. Ask your CPA about this though for advice on your specific situation.

Finally, pickup a copy of a university accounting textbook (introductory course) or find one online. There are plenty available. Not every part of the book will apply to your situation, but it will be an invaluable reference. (as is your CPA)

Regards,
Adrien



> On Feb 21, 2019, at 12:34 PM, zcacogp <gnucash at deep-green.co.uk> wrote:
> 
> Hi, 
> 
> First message here. Be gentle - thanks! 
> 
> First time user of GnuCash as well. AND, making things worse, I don't know
> much about accountancy either. Hence this post. 
> 
> I run a small letting agency, and have always done my accounts on a series
> of spreadsheets. It's worked for a number of years but my accountant if
> getting fed up with what is effectively a very disparate bespoke system and
> asked me to start using a proper accounting package. GnuCash looks good and
> I'd like to make it work for my business. 
> 
> I'm not an accountant and hence am not /au fait/ with accountancy
> terminology, but am learning fast. I think I've understood some of the
> basics of GnuCash (I've been playing with it all afternoon) but can see that
> setting things up correctly will be a major part of success or failure. My
> agency handles client money; a tenant will pay me their rent (£1000/month),
> I raise an invoice for my agency fees (£100) and pay the rest on to the
> landlord (£900). Am I best advised to set up each property as a separate
> account file or as a separate Account under "Current assets"? Bear in mind
> that of the rent payment above then only £100 of it is company money; £900
> belongs to the landlord from the moment the payment is made to me. 
> 
> For what it's worth, my business has two bank accounts; one Clients Money
> Account (where the rent is paid into) and one Company Account (from which I
> pay bills from suppliers and so on). 
> 
> Other posts on here suggest that I should treat the payment as being £100 of
> income for my company and £900 of loan, and I pay off the loan to the
> landlord who exists as a creditor of mine. I understand this concept but am
> not sure how to set this up on GnuCash. I am sure I can learn, but helpful
> tips would be welcomed. 
> 
> Thanks in advance for any help. 
> 
> 
> Oli.