Correct way to handle vacation rental payments in Quickbooks (not integrated with OR) ?

Hi,

(See QUESTIONS at bottom)

Anyone have a good handle on the accounting/correct way to be handling taxes relative to Quickbooks?

Here's my understanding:

A) There is a Financial Report available in VRBO that lists "Gross booking amount", "Deductions" and "Payout"

B) For each booking, VRBO deposits the "Payout" amount into my bank account (Gross booking - Deductions)
example: Gross booking amount = $243.81
Deductions = $7.31
Payout = $236.50

C) At tax time I run a report on the total funds received as 'Gross bookings'

NOTES
I'm pretty sure I am required to pay Sales Taxes on the Gross booking amount. In other words, I can't just import the payments I receive in my bank account, but instead I need to record each booking transaction in Quickbooks with two accounts. A positive account for the gross booking amount, and a negative amount for the deductions. I'm not mentioning cleaning fees because they are included already in the Gross booking amount. Mentally I'd like to think about paying taxes only on the cash I end up with in my pocket ***BUT*** I don't think that's how sales taxes work. I have to pay tax on the full amount paid by the guest, which includes the deductions that VRBO keeps and the (pass thru) amt I collect and pay to my cleaning service. And all this gets more complicated when I start using AirBNB and bookings in OR itself.

QUESTIONS
1) Is my understanding correct?
2) Suggestions for how to automate this (without using OwnerRez)? EG: I imagine I can import the Financial Report from VRBO in some way to cause the Gross bookings and deductions to be associated with each transaction, resulting in the correct Payout amount

PS - I'm not currently interested in using Quickbooks Online. I have other businesses that are tracked in Quickbooks Pro and don't want to have to reinvent my accounting practices... Just need advice about how to practically handle tax time each quarter.

Reading through this makes me think you should talk to a CPA to set yourself up. Several items look like a possible lack of understanding of VR accounting. Taxes etc are not automatically like other industries.

Don't depend on a forum to guide your accounting, including state or local issues...

JTVR - I'd prefer answers, not suggestions about my lack of understanding. Perhaps you can revisit my questions and give specific (and useful) comments?

Hi Rich,

You could copy the model we use in integrating with QB, only do it yourself manually with the Desktop version. Basically, each booking is turned into an invoice in QB and then each payment is turned into a QB payment against that invoice. The invoice date is the arrival date of the booking so that the income is not realized until the month of the booking. That allows you to wait to pay the tax until the month of stay has booked in case the booking gets cancelled. I don't know of any tax authority that will give you a refund.

We are going to be changing (or adding) the model to use something that accountants like better which is to have a QB invoice for each payment that occurs with a final "close out" invoice once the booking has arrived to realize the income. There are several benefits to this model and, as I said, the accountants we work with have said this is a better model.

I would recommend talking to Ximplifi Accounting which we have mentioned before on this forum. We can send a recommendation email for you if you'd like. They have helped a bunch of OR users already and understand what OwnerRez and QB can both do.

Hi Paul, I'm just setting up OwnerRez this week and I'm loving the centralized calendar and integrations. I'm also connecting my QBO account. Question... have you started implementing the second model that accountants like better (invoice for each payment)? Also, can you elaborate what you mean by the final "close out" invoice you specify? What exactly is this?

Again, loving the software, this is very much a well-rounded solution.

Respectfully,
Jason

Not yet. We've been hunkered down on messaging, website and PM stuff since then. We do plan on working on QB updates throughout 2021, but no ETA yet.

The difference in model is basically that income isn't realized until the booking actually arrives and the money is held in liability accounts until then. The way it works now, there is a single QB "invoice" created for each OwnerRez booking and then payments are mapped to payments on the QB invoice. It works, but there are accountants who advise doing the other model instead.

Hi Paul, hope y'all don't mind if I piggyback on this thread...

I am in the midst of trying to figure out how to run my accounting. I have QuickBooks Online, as of very recently, and I do not yet have it linked to my OwnerRez account. Thus, the income that QB registers is that which comes from VRBO, AirBnB, and Stripe for my direct bookings, into my business checking account (linked to QB).

If I were to integrate my QB to OwnerRez, would it run the income accounting as you laid out above, in that the income isn't realized until the booking actually arrives, or would I then need to reconcile the bank registered deposits with what comes from OwnerRez? Or would it automatically create the liability account thing and reconcile itself?

Also, would OwnerRez account also for financials from VRBO and AirBNB or only the direct bookings?

Thanks so much!

No worries. So you'd still have to do reconciliation to account for the bank account transactions pouring in from Vrbo and Airbnb.

What OwnerRez's QB Sync does (right now) is create sales transactions in the form of invoices and "received payments" in QB that correspond with bookings and payments in OwnerRez. Each booking is automatically turned into a matching invoice in QB and each payment likewise.

Then, what you have to do, in the bank transactions area, is "bring in" the deposits and match those to the paid invoices that were created in QB. This is required because those deposits often do not match to the penny what is in the invoices and payments. For instance:

- a single deposit from Airbnb or your CC processor can include multiple booking payments that is deposited into your bank account in one deposit

- a deposit from Airbnb or your CC processor can have fees removed before the send you the deposit

In both of these cases, you need to create a Bank Deposit record in QB that matches to what you actually got and then matches to invoice payments that were made along with an adjustment for the fee that was taken out. Then, that Bank Deposit record will match to the penny the bank transaction that shows up.

We plan on updating our QB sync to provide more of this automaticaly but just haven't had time to work on it yet.

Rich,

There are some best practices on how to manage VR in Quickbooks however the current QB integration doesn't do everything needed to support them. I'm happy to provide you with more information or maybe I will just post it in the post I refer below. The post itself lists the issues and some best practice recommendations. They may not make sense to everyone that is not steeped in accounting but part of the solution would be to document Best Practices and the philosophy followed by OR in their implementation.

I am trying to create urgency with addressing Quickbooks Integration / Accounting issues in OR by having all key stakeholders join together to create a louder voice. To do so I have tried to summarize all the open issues in this theme and have created one master feature request that I am asking everyone that would like to see this addressed cast a vote for so we concentrate our voting and allow OR to see the magnitude of the need. I do have some ideas for a rapid resolution but at this time want to focus on identifying and prioritizing the issues/problems and have OR engage in prioritizing this fix.

The comprehensive thread is that this Feature request (full link below). If you feel this is a need PLEASE VOTE. If you have any additions, corrections, or comments please reply and I will try to keep the top post updated.

https://www.ownerrez.com/forums/go/70573

Thank you for your support and lets get a roadmap for this once and for all!!

Manel