We have several balance sheet accounts. We have assets, cash, receivables – rent that’s not been paid but is due – supplies, pre-paid rent, the value of your building less accumulated depreciation, and then you have equipment. There are some other accounts that in theory you could put in here, but it’s really not required.

Liability Accounts

Then we have what are called liability accounts. These are your accounts payable. These include salaries payable, taxes payable – real estate or even income taxes. If you have a mortgage on your property, mortgage payments, you would set it up as a liability.

Equity

The third compartment of all balance sheets is your equity. Your owner’s equity and the amount maybe you’ve taken out of your business.

These are a basic, fundamental set of chart of accounts that you can take and can incorporate into your balance sheet. Things like Quicken and most of these software packages will have these chart of accounts pre-populated. You don’t even have to worry about it.

A lot of times they have too much. You can start to delete some of them out, because it gets kind of confusing. In particular if you only have a few properties you want to keep it relatively simple.

Statement Accounts

The next are the income statement accounts. We talk about revenue accounts. These are obviously rent. There are late fees, application fees, and potentially interest. If you have a security deposit, then there might be some interest there, and then other. There are potentially other ways that you can earn. You might do some assignment fees and things like that. Those are our basic set of revenue accounts for most landlords to be sufficient.

On the expense side, this is the basic set that we use. There are administrative fees, bank fees, supply expenses, salary expenses, payroll taxes and fees, and things of that nature. Taxes – if you have unemployment or worker’s comp you have to file those taxes. There are rent expenses. Maintenance and repairs are going to be a big one for your buildings. If you have a property manager you would have a management fee.

Insurance

Insurance is definitely another big one. You would obviously have insurance or interest expense. You’re going to have marketing costs. You’re going to have an office, so there are office supplies, equipment, computers, a fax, and things like that. These are all expenses.