Could someone with good understanding of accounting and manager.io advice how is best to handle property service charge.
So it is the management company that is responsible for all building repairs.
Income: Rent or “Service Charge”
Expenses: Accounting, Insurance, Various Repair and Maintenance
Maintenance can be attributed to internal or external, where some flats in the building do not have access to internal parts therefore do not contribute
I did set up each flat as Customer in manger
In the end of the year I need to allocate service charge (maintenance expense) to flats which should be equal to all expenses of the company, but could be allocated in different proportion
Question:
How do I record these allocations to customer accounts in the end of the year?
OP 1. Calculate in excel and put journal record?
OP 2. Use P&L Appropriations similar to what you do for Limited company for corporate and dividend allocations, which makes it clear on accounts that expenses were recharged back to customers
I am not sure if I explained what I am trying to achieve, but hopefully it gives an idea.
My Accountant was advising on having a special account in assets for each flat for allocation, but he does not know manager.io very well, so we settled with customer accounts, but now I am struggling how to record allocation. If I issue invoices, I am not sure what accounts these invoices are paying.
If anyone has their property management setup in manager.io would really appreciate if you could share your chart of accounts and general tips how you handle it in accounts?
You have left out the most important information. Who are you doing the accounting for and what is their relationship to the ownership of the property? Are these accounts for a property management company that has been hired to manage a building? Or are they for a business that has made an investment in the building and hired the property management company to do the management work? It is difficult to tell because, for example, you do not seem to have any loans on property. And you are set up to record ground rent expenses. I could go on.
Overall, my first reaction is to wonder why you are allocating anything to customer accounts. What are you calculating or appropriating with your various options? Why are you not simply recording receipts and payments?
In summary, it is not clear what you are trying to accomplish.
Thank you very much for response and sorry for not being able to explain it properly.
The company owns the building and all flats are leaseholds on 100 year lease.
Ownership is in Assets under Freehold Property Account and there are no loans.
Company is responsible for maintenance
All maintenance are recorded via receipts and purchase invoices allocated to expense accounts
What is assigned to Customers (Flats) is income accounts are not expenses it is what company recharges for the year expenses to the flats for maintenance.
What I can not get my head around is:
Company does work or subcontracts work for maintenance
Allocates all to appropriate expenses (Insurance, Repairs, Accounting, etc …)
Total expenses = £1000
Company need to issue invoices to flats to cover that £1000 of expenses, but it might be a different percentage per flat
How do you link expenses to recharging them to clients (Flat leases) income accounts
I issue invoices and assign income to income accounts, but that has no relationship to the expenses of the year
Should there be some kind of asset account for each flat and allocations of recharge is done after year expenses are known via journal and then it somehow links to income accounts when invoices are issued.
Let me try to simplify the barrage of information you have provided. It seems that you are trying to charge the tenants of the flats for various expenses you have incurred on their behalf on top of the regular rent. Is that correct?
If so, since each tenant is already set up as a customer, use billable expenses. I’ll give you an example. Suppose Flats 1, 2, and 3 are the same size, each occupying 20% of the building. But Flat 4 is larger, occupying 40%. You receive a 1,000 bill for repairing the roof which you are entitled to pass on to the tenants. You would record a payment to the roofing contractor with four line items. Each line item would be posted to Billable expenses for one of the tenants. Flats 1, 2, and 3 would be posted 200 each, and Flat 4 would be posted 400. At the end of the period, raise a sales invoice for each tenant from the Customers tab for the uninvoiced amount(s).
What you would be doing is not charging the roofing repair to your own expense accounts, but passing the cost directly through to the tenants. In other words, your business did not pay to repair the roof, the tenants did. You only arranged the payment on their behalf.
What would that accomplish? You need to create sales invoices for your tenants if you want them to pay. What would you be trying to do with a journal entry?
