Why Property Management Accounting Matters
Managing rental properties isn’t just about collecting rent—it’s about staying on top of your finances. If you’re a landlord or property manager, you need to know where your money is going, what’s coming in, and how to stay compliant with the law. That’s where property management accounting software comes in. But with so many options, how do you choose the right one?
This guide breaks it down in plain English. You’ll learn the basics of property management accounting, the must-know terms, and the top features to look for—plus how SimplifyEm can make it all easier.
1. What Is Accounting?
Accounting is simply the process of tracking money. It shows how much you earn, how much you spend, and what you owe. Every business uses accounting to make smart financial decisions.
2. What Is Property Management Accounting?
Property management accounting is a specialized type of accounting. It’s designed for rental properties and covers everything from rent collection to maintenance costs and owner payments. It also helps you follow legal rules, file taxes, and keep your books in order.
SimplifyEm handles all the accounting for you in an easy to use manner. You just enter the checks that come in and payments you make.
3. Key Property Management Accounting Terms (Made Simple)
Here are some important words you’ll see often. Don’t worry—we’ll keep it simple.
Accounting Period
The time you track finances for—usually monthly or yearly.
Accounts Payable
Money you owe, like repair bills or vendor invoices.
Accounts Receivable
Money owed to you, such as unpaid rent.
Accrual Accounting
Records money when it’s billed or earned—not when it’s paid.
Allocation
Splitting up income or costs between properties, units, or rent due.
Asset
Anything valuable your business owns.
Bookkeeping
Keeping track of daily income and expenses.
Bank Reconciliation
Making sure your records match your bank statement.
Cash Accounting
You record income or expenses only when money changes hands.
Chargeback
When a fee or payment is reversed.
Chart of Accounts
A list of categories used to organize finances. Common ones include:
- Assets
- Liabilities
- Equity
- Income
- Expenses
NARPM Chart of Accounts
A standard layout many professional managers use, approved by the National Association of Residential Property Managers (NARPM).
Credit / Debit
Credits usually increase income or reduce expenses. Debits are the opposite.
Depreciation
Loss of value over time (think appliances or furniture).
Equity
Your ownership value after debts are paid.
Expense
Money spent to operate the property—repairs, utilities, etc.
Fixed Cost
A regular cost that doesn’t change, like insurance.
General Ledger (G/L)
A full record of all financial transactions.
GAAP
Rules for how businesses should handle accounting. It stands for Generally Accepted Accounting Principles.
Liability
Money you owe—like a loan or unpaid bill.
Overhead
Everyday business costs, like office rent or software.
Revenue
The money you bring in—mostly from rent.
4. Cash vs. Accrual: Which Accounting Method Is Best?
There are two main methods:
- Cash accounting: Record money when it’s paid or received. It’s simple and great for small landlords.
- Accrual accounting: Track income and expenses when they’re billed—even if no money has moved. It gives a clearer picture of your finances.
Tip: The IRS usually allows landlords to use cash accounting. For more details, check out the IRS rental income guide. SimplifyEm will allow you to see your accounting in a cash or accrual basis, it keeps track of things both ways without any extra work on your part.
5. Trust Accounting: Keep Owner and Tenant Money Safe
Many states require trust accounts to hold tenant rent or security deposits. These accounts must be separate from your business account and follow state rules.
For example, in California, property managers must open a trust account and follow strict reporting rules. Here’s a helpful guide from the CA Department of Real Estate.
SimplifyEm has built-in tools that support trust accounting and help you stay compliant in an automated manner.
6. Tracking Tenant Balances
Accurate tenant records are a must. Look for accounting software that tracks:
- Rent paid and due
- Late fees
- Security deposits
- Credits and refunds
With SimplifyEm, tenant balances are automatically updated and easy to access anytime.
7. Owner Statements and Payouts
If you manage properties for others, you’ll need clear records for them too. Good accounting software should:
- Generate monthly owner statements
- Track income and expenses by property
- Handle automated owner payouts
- Help with tax forms like 1099s
SimplifyEm does all this and more, giving owners access through their own secure portal.
8. How SimplifyEm Makes Property Management Accounting Easy
SimplifyEm was built for landlords and property managers who want smart features—without a big learning curve. Here’s what you get:
- Automated rent tracking and bank syncing
- Trust accounting support for state compliance
- Customizable chart of accounts, that supports NARPM standards
- Owner and tenant portals
- One-click reports and 1099 eFiling
Bonus: It’s affordable and comes with free customer support.
Frequently Asked Questions (FAQs) about Property Management Accounting
- What is property management accounting?
It’s the process of tracking rent, expenses, deposits, and owner payouts in rental property businesses.
- What is the best accounting software for property managers?
SimplifyEm is a top choice for its ease of use, trust accounting tools, and landlord-friendly pricing.
- Should I use cash or accrual accounting?
Cash accounting is best for most small landlords. Accrual is better for larger portfolios or when you need a full financial picture.
- Are trust accounts required?
In many states—yes. Check your state’s real estate rules to be sure.
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