The business of real estate and property management can be very difficult to manage if you don’t define the niche you are; this is because, real estate isn’t all about developing properties and reselling to potential buyers, it also entails sourcing and managing tenants on behalf of property owners, or acting as a middleman between interested parties who would like to execute high-ticket transactions for a commission.
These categories of real estate businesses require a different accounting system and financial reporting. For instance, accounting for a real estate broker requires effective recognition of commission income after deducting direct expenses like advertisement on dailies, or any other relevant direct cost. This is totally different from a real estate manager who is interested in tracking rental payment from tenants, receivables on overdue rent, remittance to property owners, service charge collections and maintenance fees.
As of this write-up, our team had just concluded QuickBooks setup for a fast-growing real estate developer in Lagos, Nigeria – they acquire a large expanse of land from families, clear the land and re-package the virgin land into an estate land, process the necessary papers like excision, survey, C of O and resell to interested buyers.
The whole essence of engaging us was to help design an automated accounting system that will track all cash inflow and direct cost on their various real estate projects so that they can ascertain the profitability of all real estate transactions.
Here Are Quick Tips On How We Deployed Quickbooks Starting With The Project Requirements:
- List of banks and their respective balances: every cash inflow from buyers on property purchases and payment to sub-contractors or service providers goes/come from the bank and such, we requested for a complete list of operating banks in local and/or foreign currencies so we upload to the Chart of Account and generate real-time bank statement.
- List of clients/customers and their receivable balance (including the properties on which these balances were owed): This is important for us as we weren’t only interested in the client’s receivable balances, but a simpler to segment their receivables by properties. In addition to the outstanding balances on property purchase, we also requested for pending payments on the survey, developmental fee and deed of assignments.
- List of real estate on offers: This is the key revenue driver of the real estate developer, so it makes sense to upload all the properties on sale and set them up in such a way that users can categorize all invoices and direct cost to properties.
- Sub-contractors/service providers and their payable balances: every land acquisitions come with clearance, dredging and construction of walls around it. These, in addition to other related expenses, are examples of direct cost incurred on these properties and when full payments aren’t made to the sub-contractors, it leads to a payable balance which should be properly tracked until they are settled.
- Equity share capital: For real estate developers with an audited record of their previous financial year’s transactions, it is easier to find the equity share capital of the owners, but for a growing business with unorganized record, QuickBooks compute a share capital that is equal to the net of assets over liabilities.
- Standard chart of accounts: Although, QuickBooks accounting software has default charts of account for different industries – a simple design that categories all your transactions to income, expenses, assets and liabilities. We always like to know whether the client already has existing charts with account codes.
Recent search terms:
- real estate agency new york (1)