Best QuickBooks Account Setup for Commercial Real Estate Software

There are many ways to handle QuickBooks account setup for business purposes. Finding the right setup depends on what your business does and what additional tools you use. Commercial real estate businesses have specific accounting and management needs that impact their optimal QuickBooks setup. This is particularly true when connecting to a property management software like STRATAFOLIO.

In this article, we’ll explore our recommended setup strategy, actionable ways to improve your current system, and a few key exceptions. 

Executive Summary

• For most commercial real estate businesses, connecting each real-estate owning entity’s QuickBooks account directly to your property management software is the safest and most straightforward approach.
• Keeping QuickBooks structure as simple and organized as possible allows financial, lease, loan, and property data to flow clearly into your property management software. 
• For portfolios with a specialized QuickBooks setup, classes and other workarounds can help make the most of property management software. Still, they require careful setup to avoid errors and inaccurate reporting.

Why the Right QuickBooks Account Setup Matters for Property Management Software

An orderly QuickBooks account setup is important for all businesses. Ensuring that each account accurately represents an entity or performs a clear, specific task helps prevent accidental double-entry of information and lost data, both of which can quickly become costly problems.

However, account organization is even more important for commercial real estate businesses planning to integrate with property management software. Property management software relies on your QuickBooks account organization to understand how to display and analyze your financial data. If the account setup is unclear, your information will be, too.

Getting the most out of your commercial property management software requires a clean and efficient QuickBooks setup so that your data is easy to find in both programs.

STRATAFOLIO’s Best Practice Recommendation for QuickBooks Account Setup

In most cases, we recommend a simple QuickBooks account organization when connecting to property management software: 

Connect real-estate owning entities only to STRATAFOLIO. If you are using an additional QuickBooks account for property management, do not connect this to STRATAFOLIO unless it is the sole operational entity. In this case, the property management account would handle all loans, leases, etc. 

This structure makes the most sense because commercial real estate leases are nearly always written under the entity or owner level. This means that tenants pay the entities or owners directly. Therefore, connecting the real-estate owning entities to property management software is the most straightforward way to keep track of all your financial data. 

An Exception for Residential Leases

While STRATAFOLIO is designed primarily for commercial real estate, residential leases are often written differently. Rather than belonging to the entity, residential tenants often pay rent to property managers. That means connecting a property management QuickBooks account to the software is the most straightforward option.

For businesses with some residential or mixed-use properties alongside commercial properties, consulting an accountant experienced in real estate on the best setup is highly recommended.

An Exception for Businesses Keeping All Transactions in a Property Management Account

Another potential scenario where our best-practice setup doesn’t quite apply is when a business runs everything through the property management QuickBooks account. This means that all rent payments and other income and expenses are all attached to the single property management file. In addition, all leases state that rent is paid to the same property management file.

In this case, it’s simplest to connect this account directly to your property management software.

Altering Your Current QuickBooks Setup for Better Performance in Property Management Software

While you may not be able to completely reorganize your QuickBooks setup, there are a few steps you can take, depending on your current situation, to reduce the risk of errors and simplify connecting to property management software.

Regular Data Transfer to Owner Files from a Property Management File

If your property management file handles some or all of your key financial data, one way to support the ideal QuickBooks setup in STRATAFOLIO is to regularly transfer that data to the individual entities. The process can be done on a quarterly or monthly basis. The result is exactly the same as if each owner file handles all its own income and expenses. Again, you can connect the entities directly to your property management software.

Adding a Faux Loan Account to a Centralized Property Management File

If you

• Use both real-estate owning QuickBooks files and a property management file
• Want to connect only your property management QuickBooks to software
• Still want access to all property management software features (such as STRATAFOLIO’s loan dashboard)

Then you may be able to meet all of your needs in property management software by creating a “fake” loan account inside of your property management QuickBooks. Effectively, you will enter loan information both in your real-estate owning files, where it will be processed in QuickBooks, and in your property management file, where it will be processed in STRATAFOLIO.

This solution is usually not ideal, as it requires extra work you can avoid with a simpler setup. It may also create errors when calculating certain KPIs such as return on investment (ROI) and net operating income (NOI). If possible, opt instead for our recommended best practice setup.

Using QuickBooks Classes to Keep Everything in a Single File

In some cases, you may need to keep the financial data for your entire portfolio in a single QuickBooks file. This approach also comes with significant drawbacks, including a higher likelihood of errors and the need for a carefully structured, well-maintained organizational system within that single file. 

However, if this setup is unavoidable, we recommend using classes within QuickBooks to differentiate entities and assets. We have found a specific structure that works best to keep everything organized.

Discover Streamlined Accounting with STRATAFOLIO’s QuickBooks Integration

STRATAFOLIO’s complete, two-way QuickBooks integration with both QuickBooks Desktop and QuickBooks Online makes it a breeze to handle your real estate accounting and property management side-by-side. Find the information you need when and where you need it. Plus, leverage key financial details from QuickBooks using STRATAFOLIO’s KPI calculators, insight dashboards, and detailed reports. 

Plus, take advantage of our expert accountants, bookkeepers, and QuickBooks ProAdvisors when you switch to STRATAFOLIO. Our team is experienced with commercial real estate accounting and can help you make the most of your QuickBooks setup when using property management software.

Learn more by scheduling a demo today.