What accounting should property management companies do?
Property management accounting centers on one critical concept. You’re handling money that belongs to other people. The rent you collect belongs to property owners. Security deposits belong to tenants until they move out. Mixing these funds with your operating money creates legal and financial problems.
Trust accounting is the foundation. Utah requires property managers to hold client funds in separate trust accounts. Rent collected from tenants sits in the trust account until you distribute it to owners or pay expenses on their behalf. Security deposits stay in trust until returned to tenants or applied to damages. Your management fees get transferred from the trust account to your operating account only after they’re earned. Commingling trust funds with operating funds can cost you your license.
Track income and expenses at the property level. Each property you manage needs its own tracking so you can show the owner exactly what came in and what went out. Rent collected, late fees, and pet fees on the income side. Repairs, maintenance, HOA dues, property taxes, and insurance on the expense side. Lumping everything together makes accurate owner reporting impossible.
Owner statements need to go out monthly. Most property management agreements require monthly reporting showing rent collected, expenses paid, your management fee, and the net distribution to the owner. These statements need to reconcile to what you actually transferred. Owners losing trust in your numbers is how you lose clients.
Reconcile your trust account regularly. At any point, you should be able to show that the balance in your trust account equals the sum of what you owe to all owners plus all security deposits you’re holding. This reconciliation catches errors before they become serious problems. Weekly is ideal but monthly is the minimum.
Your company has its own books separate from property accounting. Management fees, leasing fees, and renewal fees are your revenue. Office rent, payroll, software subscriptions, and marketing are your expenses. These run through your operating account and need their own set of books. Your profit and loss has nothing to do with the properties you manage.
Software matters for this work. Generic QuickBooks works but requires careful setup to handle trust accounting correctly. Property management platforms like AppFolio, Buildium, or Rent Manager handle trust accounting natively and integrate owner reporting. Most property managers use dedicated PM software for property accounting and sync to QuickBooks for their company books and tax preparation.
If your books are messy or you’re not sure whether your trust accounting is compliant, getting help now is cheaper than fixing problems later. A bookkeeper in American Fork familiar with real estate can review your setup and make sure you’re tracking everything correctly.
Utah's Construction Bookkeeping Specialists
The Next Step:
A 15-Minute Call
We'll ask a few questions about your business, figure out what you need, and give you a straightforward price.
More Questions
What is included in full-service bookkeeping?
Full-service bookkeeping covers transaction categorization, bank and credit card reconciliation, and monthly financial statements. You get clean books without doing the work yourself.
Read answerWhat is the best way to manage finances for a pool contractor?
Managing pool contractor finances requires job costing for each project, milestone-based billing, and seasonal cash flow planning. Separate business accounts and properly configured accounting software make tracking straightforward.
Read answerHow do I price my jobs as an electrical contractor?
Job pricing requires knowing your fully burdened labor rate, material markup, overhead allocation, and profit margin. Most contractors underprice because they don't have accurate data on what jobs actually cost.
Read answerWhat is progress billing and how do I track it?
Progress billing is invoicing based on work completed rather than waiting until the project ends. Track it using a schedule of values that breaks the contract into line items, then invoice for the percentage complete on each item each billing period.
Read answerWhat is the best way to set up a chart of accounts in QuickBooks?
Start with QuickBooks' default industry template, then customize to match your reporting needs. Keep it simple because too many accounts leads to inconsistent categorization and reports that don't tell you anything useful.
Read answerCan I find a local bookkeeper in Utah County who understands job costing?
Yes, though bookkeepers with genuine job costing expertise are less common than general bookkeepers. Look for someone with actual construction industry experience who can explain how they track costs by job, not just by expense category.
Read answer
