Property Management companies, for instance – Letting Agents, manage properties that they don’t own.
Their services are VATable if they voluntarily register or hit the VAT threshold.
Their income should be the fees that they charge to their clients and they can offset the expenses that relate to their business for example:
But as the properties aren’t owned by them they need to keep their client accounts on the balance sheet in control accounts.
Rent from Tenants
Then the net amount is passed to the landlord with a statement
It is also possible that the Property Management Company may keep their client accounts entirely separate to their own with separate bank accounts and ledgers, this approach is the best option
Sage One makes this easy to account for properties because you can use Projects, Cost Codes and Departments to analyse the costs.
There are also lots of specialist software package for property management companies
2 thoughts on “How should you account for a Property Management Company?”
I like your point that property management company can keep their accounts separate from their clients. Represents your own company with its income from management fees and overhead expenses.
So this is the best option and a good banking secret.