Guidance on how to structure accounts for developer

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Hi everyone,

I’m new to Manager and still getting my bearings, but so far I’m a big fan. I run a small residential development company that’s just getting off the ground. We initially used Excel, but I wanted to get our books properly organized and landed on Manager.

I’m looking for guidance on how best to structure our accounting within Manager based on how our business operates. What we do is purchase unimproved land, complete the engineering and city approvals to subdivide, develop the lots, build homes, and then sell them. I’ve read through most of the guides, but I’d really value input from experienced users to make sure I’m setting this up correctly from the start.

Unlike many businesses where land is treated as a fixed asset, land is inventory for us, and development costs are capitalized. For example, on our current project we subdivide one parcel into three lots (Lots A, B, and C) and will build a home on each. My understanding is that all shared development costs would be capitalized at the parent parcel, then allocated across the three lots to establish a basis for each. From there, the construction costs for each home would be capitalized to its respective lot.

Specifically related to Manager, I have a few questions:

· Should inventory be used to manage this type of workflow? What is the recommended approach to setting up the chart of accounts for a small residential developer?

o Inventory in Manager seems geared toward individual items and requires purchase invoices to place inventory on hand, which may not align perfectly with purchasing land and capitalizing development costs.

· What is the best way to capitalize expenses, allocate them to the appropriate assets, and keep everything clearly categorized?

o Parent parcel: site work, engineering, legal fees, city fees, etc.

o Lot A: building materials, subcontractors, architect and design fees, etc.

· How should projects and sub-projects be incorporated into this structure, if at all?

I understand a CPA would ultimately need to confirm the accounting structure, but any practical guidance on how to implement this specifically within Manager would be greatly appreciated. It would help a lot with the learning curve.

Thank you in advance.

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@gb.mgmt welcome to forum.
real‑estate development can fit well once you decide whether to treat each property as “inventory” or run it through a purpose‑built work‑in‑progress (WIP) structure. Below are two proven setups Manager users employ for land development/homebuilding, plus how Projects can overlay either one.

Option A (recommended for developers): Development inventory via Special Accounts
Why: Land and construction are capitalized, not expensed; you don’t really “stock” multiple interchangeable units, and you don’t need delivery/warehousing workflows. Special Accounts let you keep a clean subsidiary ledger per parcel/lot right on the balance sheet.

  1. One‑time setup
  • Enable Special Accounts.
  • Create a custom control account under Assets, e.g., “Development inventory (WIP).”
  • Under Special Accounts, create one subaccount per asset:
    • Parent parcel (e.g., “Parcel 123 Parent”)
    • Lot A, Lot B, Lot C (to receive allocations after subdivision)
  • Add revenue “Property sales” and expense “COGS — property” accounts to your chart.
    References: Special Accounts feature and placing them under a custom control account.
  1. Day‑to‑day coding
  • Land purchase: Enter a purchase invoice to the seller; post the line to Development inventory (control) and select the “Parcel 123 Parent” special account.
  • Shared development costs (engineering, legal, city fees, site work): Post to the same parent special account.
  • Lot‑specific build costs (materials, subs, design for Lot A/B/C): Post directly to the respective lot’s special account.
  1. Allocate the parent parcel to lots when you subdivide
  • Journal entry on subdivision date:
    • Credit “Parcel 123 Parent” special account for total to reallocate.
    • Debit Lot A/B/C special accounts based on your allocation basis (e.g., appraised value, frontage, acreage, equal thirds).
      This keeps capitalization intact and establishes each lot’s basis cleanly. The Special Accounts subsidiary ledgers will show the running detail by lot/parcel. (manager.io)
  1. Recognize COGS on sale
  • Record the sale (Sales invoice or Receive money) to “Property sales.”
  • Same date, journal entry: debit “COGS — property,” credit the sold lot’s special account for its accumulated balance. This moves capitalized costs out of WIP and recognizes margin at closing.

Pros

  • Mirrors GAAP/IFRS capitalization.
  • Clear drill‑down by parcel/lot on the balance sheet.
  • No need for inventory locations, delivery notes, or production workflows.

Trade‑offs

  • COGS is recognized by a journal entry at sale (not automated like inventory items).
  • If you want unit‑level quantity tracking, see Option B.

Option B: Treat parcels/lots/homes as Inventory Items with Production Orders
Why: If you want Manager to calculate average cost per lot/home automatically and recognize COGS when you “deliver” the finished unit.

  1. One‑time setup
  • Create inventory items:
    • “Parcel 123 (Parent)” qty 1
    • “Lot A,” “Lot B,” “Lot C” (each qty 0 initially)
    • Optionally separate “Home on Lot A/B/C” as finished goods after construction.
  • Enable Production Orders. (manager.io)
  1. Day‑to‑day coding
  • Land purchase: Post a purchase invoice line to inventory item “Parcel 123 (Parent)” qty 1 at the land price. Inventory item quantity/average cost will hold the land at cost. (manager.io)
  • Shared development costs: Either
    • Accumulate temporarily in a “Capitalized development — Parcel 123” asset account, then add into the production order as non‑inventory cost at the time you split the parent into lots; or
    • If enabled in your version, add non‑inventory costs directly on the production order to capitalize services to the finished items’ cost. Forum users discuss this “add non‑inventory cost into production” behavior for capitalization. (forum.manager.io)
  • Split the parent parcel into lots: Create a production order that consumes 1 unit of “Parcel 123 (Parent)” and produces 1 each of “Lot A,” “Lot B,” “Lot C.” Allocate any non‑inventory costs and set quantities so Manager spreads total input cost across outputs (you can weight by % if needed). (manager.io)
  • Build each home: Either
    • Use a second production order to convert “Lot A” into “Home on Lot A” and add construction costs as non‑inventory inputs; or
    • Keep a single “Lot A” item and continue adding costs via production orders until sale. (manager.io)
  • Sale and COGS: With recent changes, inventory quantities no longer move on sales invoices—you must use Delivery Notes for issues and Goods Receipts for receipts. So, at closing, issue a Delivery Note for the finished home/lot to trigger COGS automatically, then invoice/receive funds. See forum note about locations and movement now happening via Delivery Notes/Goods Receipts. (forum.manager.io)

Pros

  • Automated unit costing and COGS.
  • Clean audit trail of cost build‑up via production orders. (manager.io)

Trade‑offs

  • Requires learning inventory/production workflows intended for manufacturing.
  • You’ll need Delivery Notes at closing to move stock (unusual but workable for property). (forum.manager.io)

Projects: how to layer them in

  • Purpose: Projects in Manager show income, expenses, and a quick profit view for a job/contract. They’re great as a management overlay—for budgeting, commitments (via purchase orders), and reporting—regardless of whether you choose Special Accounts or Inventory Items. (manager.io)
  • Practical tips:
    • Create a Project for each development (e.g., “Parcel 123 Dev”) and optionally sub‑projects for each lot (“Lot A,” “Lot B,” “Lot C”).
    • Assign purchase orders to projects to see committed costs in the Projects tab before invoices land. Note: Projects focus on income/expense reporting; capitalized costs posted to the balance sheet won’t show as project “Expenses” until recognized (Option A) or will flow via inventory COGS at delivery (Option B). (manager.io)

Which option should you choose?

  • If your workflow is milestone‑driven (permits, subdivision, construction, sale) with few concurrent “units” and you value simple capitalization and clear lot‑by‑lot WIP balances, choose Option A (Special Accounts).
  • If you prefer automatic COGS recognition and per‑unit costing handled by the system—and you’re comfortable using Delivery Notes at closing—choose Option B (Inventory + Production Orders).

Suggested starting chart for a small residential developer

  • Assets
    • Development inventory (WIP) [control account]
      • Parcel 123 Parent [special account]
      • Lot A [special account]
      • Lot B [special account]
      • Lot C [special account]
  • Equity and Liabilities as needed (loans, investors, etc.)
  • Income
    • Property sales
  • Expenses
    • COGS — property
    • Overheads (not capitalized)

Allocation example

  • Suppose you subdivide into Lots A/B/C using appraised percentages 35%/35%/30%.
    • Journal: Credit Parcel 123 Parent for total capitalized balance; debit Lots A, B, C per those percentages.
    • Continue capitalizing lot‑specific build costs directly to each lot special account.

Operational tips and pitfalls

  • If you go with inventory:
    • Recalculate average costs if you’ve performed multiple production steps or cost allocations. (manager.io)
    • Remember: quantities move with Goods Receipts/Delivery Notes, not directly on invoices in recent versions. Build your process around that. (forum.manager.io)
  • If you use Special Accounts:
    • Keep all capitalized costs on the balance sheet by parcel/lot; only move to COGS on the sale date to align revenue/cost recognition.
    • Use Advanced Search and drill‑downs on Special Accounts for clean audit trails. (manager.io)
  • Projects:
    • Use them for management reporting and purchase‑order commitments. Just remember that balance‑sheet postings won’t inflate “Expenses” on the Projects screen until recognized. (manager.io)
      Chabot reply
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I agree with everything @Syed_Salman_Ali has recommended. I would just like to add that if you use Projects, generally all costs allocated to each project will represent the value of work in progress until the property is sold. You can transfer the total project expenses periodically to a work in progress asset account by journal entry to capitalize the costs until the property is sold.

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@tony Nice one. :+1:

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very useful topic.

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Thank you for the response it helps a lot, and is helping to make clear sense of my options within manager. It seems like option A would fit my needs better. A few more questions on this structure.

Creating the sub accounts makes sense under the special account “development inventory”, however looking forward, how would I treat those sub accounts once that particular development is completed and moved to COGS. Down the road they will start to add up with previous developments and potentially multiple going on at once. Would I delete those sub accounts and create new ones for the next development, letting it be tracked by projects for future reference?

With the day to day coding, should there be sub-sub accounts, or groups with sub accounts, to track the expense categories? It wouldn’t be the end of the world to have everything associated post direct to its respective account but it would be nice to track the categories.

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Once an account is created, it will always remain in your chart of accounts - you can inactive it but not delete it once it has an entry in the account

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