Expenses and Transfers - Locations Method

This is our current "Best Practice" - please use this guide unless you are using our Balance Sheet Method

Updated yesterday

This guide is applicable for all new clients with few exceptions May 2023 and forward.

Rules for categorizing and classifying bank and credit card feed transactions Paid from Operating Account or by Credit Card

If the charge is...

Category

Location/

Business

Class (1)

Billable to an owner, and should reduce his or her rental income/payout

Trust Liabilities:Owner Payables:Net Earnings:Owner Expenses/Adjustments

TRUST

[Select listing name]

NOT billable to an owner, and
NOT listing-specific
​(like the PM's overhead/G&A expenses)

[Select the natural P&L expense category]

PM

[Select PM/General name]

NOT billable to an owner, and
IS listing-specific
​(like property-related expenses the PM will cover)

[Select the natural P&L expense category]

PM

[Select listing name]

(1)-Class alone does not dictate assignment of income/expense to the owner versus the PM. Category does. Class simply identifies the source property of the income/expense.
-It is expected that certain types of income/expense payable to the PM will be classified by property.
-The class assigned to any category within the "Owner Payables" hierarchy dictates which listing's ledger (i.e. owner statement) the income/expense item falls onto.


When handling your transfers from trust to operations after completing your month-end reconciliations and Location Journal Entry, use the guide below to capture the transactions.

NOTE - do not record as a "Transfer" in QBO. There is a deposit and expense transaction.

This example is for a transfer of $22,809.92 moved from the Trust account to operations in January 2024.
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In the Trust Account bank feed, you will categorize the outgoing cash is an expense, using the category "Transfers to/from Opex/Trust" account in Equity, using the Trust Location.

Then in the Operating Account bank feed, you will categorize the incoming cash as a deposit hitting the "Transfers to/from Opex/Trust" account in Equity, but using the Operating or MC location.

The two amounts will cancel each other out in Equity, and the cash will move from one QBO location to another:
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