Would a holding account help me solve many problems.

This is my first time using the quicken community. I have used some of the basic functions of the program but I want to be able to better show the money trail and keep up on who has or hasn’t paid rent etc.. I have a rental where the tenants pay the rent and a flat fee for the utilities. I want to use the rent center and don’t want to have the utility payments added into the rent. The housing is for 3 students and they all pay their rent through vinmo (usually) separately. Some use one vinmo entry to pay for both the rent and the utilities together and others use two separate entries to pay their bill. I have some tenants that pay more than one month in advance and others that are behind a month or more. When they first start renting many will include their deposit with the rent. I read about using a holding account that sounded like it could be useful in one or all of these situations but the posts I have read haven’t made it very clear how the mechanics of this work. Is someone able to explain in detail how a holding/suspense account works and how I use the Rental center for the rent and at the same time split the check and categorize the other part. Visual representation of what the different screens might look like would be super-helpful. I am using the Windows quicken Home and Business subscription. Thanks for your time and efforts, HandyMan.

Answers

  • india just
    india just Windows Beta Beta
    I think you will have to do some manual editing of such irregular and mixed payment streams. I have several private loans that pay  mix of interest, service charges, fees, and principal. For whatever reason they are unable to pay in a simple fashion.

    I tried using such accounts in the past, but find the complexity is not worth the effort.

    My suggestion is if you insist on such a holding account, drive the balance to zero each month. You can memorize the contract payments you expect. The holding account should net to zero over the life of the renter.

    I ended up doing manual data entry, editing the transaction totals with split transactions across the same categories always. In your case, likely rent, utilities, late fees/charges, deposit.
    Long time user, mac only, brand new to beta testing.  NOOB.  Allin on beta.
  • Tom Young
    Tom Young SuperUser ✭✭✭✭✭
    Since I don't use the Quicken Home & Business version I can't comment on how the Rental Center works, but the concept of "clearing account" is easily understood.  Basically a clearing account is a balance sheet account where you "park" dollars so that the dollars don't flow into the P&L when the actual cash is received, or disbursed.  Instead they are left in the clearing account until it's time to recognize the income or expense. 
    So in the case of a tenant that pays in advance, (assumes actual rent is $500/mo) the straight-forward entry entry would be:
    Debit (increase) Cash in Bank        $1,000
    Credit (increase) Rental Income    $1,000
    The income amount equals the actual dollars received.
    But with a balance sheet clearing account you'd make a split entry (Quicken terminology) for the deposit:
    Debit (increase) Cash in Bank        $1,000
    Credit (increase) Rental Income      $ 500
    Credit (increase) Clearing Account  $ 500    (In this case the Clearing Account has been set up as a Liability Account)
    Then next month you'd make an entry to the Clearing Account to recognize that month's rental income:
    Debit (decrease) Clearing Account  $ 500
    Credit (increase) Rental income      $ 500
    A clearing account can be an asset or liability, it really doesn't make any difference from an accounting point of view.
    But before getting too fancy here you might want to look at "Topic No. 414 Rental Income and Expenses" at the IRS's site: https://www.irs.gov/taxtopics/tc414
  • HomeRepair
    HomeRepair Member
    To Tom Young and India just - Thank you for your explanations. Tom Young's link to the tax code where it stated, "Expenses paid by a tenant – If your tenant pays any of your expenses, those payments are rental income. You may also deduct the expenses if they're considered deductible expenses," seems to make it pretty clear how the government will look at this. India just, reinforced the income and expense approach because of its simplicity. Even though using a liability account, to me, seems to reflect the money trail more accurately with me acting only as the middle- man, showing these transactions as income and expenses is much easier and simpler Thanks again for your answers.