This is g8 software.
my business uses a property management company to collect rents, they then deduct maintenance costs, management fees etc and pay my business bank account net of these costs.
Does anyone know a solution to how I account for the gross rent and these costs the property management company has when they arent transacted through my bank accounts, I only receive the net payment.
create invoices for each sale and purchase
when receive funds from management company post positive amount to sales invoice, negative amount to purchase invoice, total corresponding to net amount received
Or just post the amounts an income and expenses account if there is no need for Sales and/or Purchase invoices
Yes im using cash basis but to post to a income account (Rent) I need a bank account to post the payment from in the receipts and payments tab, but the gross income doesn’t come into any bank account. I only receive net income to a bank account.
@Tut this is the type of post I meant in the other thread as it’s a question about accounting principles and not about the Manager application.
Use a receipt transaction with two lines
1st line post gross amount to income account
2nd line post agents fee to expense account using negative amount
Net total will be receipt to bank account or whatever bank or cash the money goes to
I disagree. It is a question about how to enter a very specific transaction into Manager. The answers alluded to three particular Manager transaction forms (sales invoice, purchase invoice, and receipt), how to break the transaction into multiple line items on them, and use of negative values in the application. Also mentioned were approaches with and without invoices.
@l_l, this is an illustration of what others are saying when you take up the Net in a New Receipt.
If you have to account for GST (VAT) then this method will report accurately on the GST(VAT) reports. Netting a Receipt or Sales invoice will incorrectly report the management fees as sales when in fact they are purchases.
When I first read the method suggested by @Patch I must admit I was sceptical that it would work but after testing was convinced.
It requires creating both a Customer and a Supplier for the Management company. After creating an Sales Invoice for the gross rent and a Purchase invoice for the management fees, go to sales invoice view screen and select the New Receipt option to create the receipt. Add a second line and select Accounts Payable account, then the Supplier and then the relative Purchase Invoice and enter the management fee amount as a negative.
Like this:
The issue is the information from the Management company is not really a receipt at all. It is a summary of many transactions organised for the owner, each with different customer or supplier.
If the owner was to do them all directly then they would never consider trying to put them all in one transaction. Hence separating out the transactions produces the results desired.
It is however an example of a barter transaction or interaction with another organisation as both a supplier and customer for which there is probably the opportunity to enhance Managers functionality should a significant number of users regularly perform this type of transaction. For me it is of limited value as I very rarely interact with another party a both a supplier and customer at the same time.
Edit
If this was really a common occurrence, an interface similar to described for journal entries would be appropriate ie per line item sale/purchase and supplier/customer specification (but for my use case, that is not my preference)
Yes it is a Receipt.
It’s the result of the contractual obligations between the property owner and the management company. The management company when contracted as the property owner’s agent has the legal relationship with the Suppliers, not the property owner.
The management company engages a Glazier to repair a window. The management company enters into a contract with Supplier and carries all the legal responsibilities related to that contract. The property owner is not a party to that contract, therefore has no Supplier relationship. If the management company fails to pay the Glazier, then their legal recourse is against the management company not the property owner.
If the management company has deducted that window repair against the rental income, then the property owner is entitled to claim that expense even though the Glazier remains unpaid as they have “paid” the management company, as their receipt has been reduced by it…
The property owner’s tax return is created based upon the management company’s property income statements, not upon the status of Supplier transactions within the management company’s own accounts, which are outside the property owner’s control.
Take Expense Claims, the employer reimburses the employee for costs incurred on behalf of the business. The business used by the employee doesn’t become a supplier of the employer nor does the employer have any legal relationship with that business. Therefore, when a property owner reimburses the management company for costs in relation to the property, via the receipt deduction, the property owner is not creating a legal relationship with the Supplier.
Legal contractual obligations are at the top of the tree, accounting is nothing more, repeat, nothing more, than the recording of the financial transactions that have occur under those various legal contractual obligations. Cross purposing those legal obligations to achieve some artificial accounting outcome is quite frankly wrong.
As an aside, it is disturbing to note the number of “accountants” who don’t understand the differential between GST/VAT transactions and accounting transactions. To put it plainly and bluntly - GST/VAT is nothing more then a levy (tax) on qualifying SUPPLY and that is what is reported. It has nothing to do with ACCOUNTING sales and expenses. SUPPLY can either be a Balance Sheet transaction or a Profit & Loss transaction.
What government reporting requires is GST/VAT Sales and the offsetting GST/VAT Purchases.
It does not require reporting
I agree the reporting requirements are a function of the contractual requirements. The details of what must be reported to the tax department depending on the details of the actual contract between this property owner and this management company, and tax legislation in there jurisdiction. That is a question for @l_l to ask his tax advisor/accountant if in doubt.
As I do not have access to @l_l contact details, I have provided suggestions of how to resolve the difficulties he is having with Manager to achieve the reporting requirements he has assessed he requires.
