I have a residential letting application and would like to export (CSV) my data into the accounts software.
Unfortunately my knowledge of book keeping is limited and I would appreciate your comments on what I actually need to do.
Detailed below is what I think I need to do which, when entered manually seems OK if I run the P&L or VAT reports.
The only issue, if indeed it is one, is that the Landlord invoices show a negative balance owing to the credits - can I link a credit directly to an invoice?
My apologies for asking so many questions at one time.
Tenants are set up as Customers
Landlords are set up as Suppliers
Suppliers are set up as Suppliers
For each Rental request....
1. Create an invoice for Tenant INV1 - post to 'Sales Income' @ £700.00, zero VAT
2. Create an invoice for Landlord INV2 - post to 'Cost of Goods Sold' @ £700.00, zero VAT
For each Rental payment....
1. Create an Invoice Payment for the Tenant against the invoice INV1 - post to 'Money to be Banked' @ £700.00
2. Create a purchase credit against Landlord invoice INV2 - post to 'Sales Income' @ £70.00, 17.5% VAT
3. Create a payment to Landlord against invoice INV2 - post to 'Cheque Account' @ £630.00
Item 2 is commission charged (internal cost with me as the supplier) - could be repeated multiple times
For Supply of services to Landlord....
1. Create a purchase invoice fo Supplier PUR1 - post to 'Subcontractor Costs' @ £25.00, 17.5% VAT
2. Create a payment to Supplier against PUR1 - post to 'Cheque Account' @ £29.38
For this service a markup is applied so do I....
a. Create a credit against against INV2 @ My Charge + VAT
b. Create an invoice against the Landlord
All the above will (Rental) and may (Supplier) form part of the Landlord Invoice\Statement issued on a monthly basis.
Hi Derek,
This is a complicated query. We will look into the best way for lettings agents to record accounting transactions in Solar Accounts and give you a detailed response next week.
Regards,
Hi Derek,
Yes, it's useful for lettings agents to treat tenants as Customers and landlords as Suppliers in Solar Accounts in order to keep track of the balances owed by each party. However, you should keep in mind that legally the tenant is not a customer of the agent (who is simply collecting on behalf of the landlord). Because of this, the agent should issue 'Demand Notices' to the tenant instead of 'Invoices'. To change the way invoices are printed, click menu Setup > Customise Invoice > Field Names, then change the Invoice Title and Invoice Number rows.
For the same reason, you should not record money received from tenants as 'income'. Instead, create a new asset account called 'Tenant-Landlord Control Account'. This account will be used to link the tenant transaction with the matching landlord transaction.
Here's how to record transactions based on your example:
When rental of £700 becomes due:
1. Create an invoice to the tenant for £700.00. The account should be 'Tenant-Landlord Control Account'. The VAT Rate should be zero and the VAT Treatment set to 'Out of Scope'.
2. Create a purchase invoice from the landlord for £700.00. The account should be 'Tenant-Landlord Control Account'. The VAT Rate should be zero and the VAT Treatment set to 'Out of Scope'.
3. Create a purchase credit note from the landlord for £70.00. The account should be 'Sales Income'. The VAT Rate should be 17.5% and the VAT Treatment 'Sale of Goods or Services To UK Customer'.
[Note that the invoices in steps 1 and 2 above have opposite effects on the control account, leaving the balance of the account at zero]
When the tenant pays the £700 due, create 2 more transactions:
4. Create an invoice payment from the tenant for £700 allocated to the invoice from step 1 above.
5. Allocate the credit note in step 3 to the purchase invoice in step 2. The date of this allocation transaction should be the same as in step 4.
When you pay the £630 due to the landlord:
6. Create a purchase invoice payment to the landlord for £630 allocated to the purchase invoice from step 2.
Now let's say you hire a plumber to fix a toilet as part of the service agreement with the landlord. The plumber charges you £25.00 plus VAT (wow that's cheap!) and you charge the landlord £50.00 plus VAT.
1. Create a purchase invoice from the plumber for £29.38. The account should be 'Subcontractor Costs'. Set the VAT Rate to 17.5% and the VAT Treatment to 'Purchase of Goods or Services From UK Supplier'.
2. Create a purchase credit note from the landlord for £58.75. The account should be 'Sales Income'. Set the VAT Rate to 17.5% and the VAT Treatment to 'Sale of Goods or Services To UK Customer'.
When you pay the plumber £29.38, record an invoice payment as normal.
When the next rental payment becomes due, allocate the purchase credit note from step 2 above to the purchase invoice for the landlord.
Now the landlord hires an electrician to fix some wiring on the property. The electrician charges the landlord £165. In this example, the legal agreement is directly between the electrician and the landlord (while you agree with the landlord to make payment on his behalf).
1. Create a purchase invoice from the electrician for £165. The account should be 'Tenant-Landlord Control Account'. The VAT Rate should be zero and the VAT Treatment set to 'Out of Scope'.
2. Create a purchase credit note from the landlord for £165. The account should be 'Tenant-Landlord Control Account'. The VAT Rate should be zero and the VAT Treatment set to 'Out of Scope'.
When you pay the electrician £165, record a purchase invoice payment as normal.
When the next rental payment becomes due, allocate the purchase credit note from step 2 above to the purchase invoice for the landlord.
Regards,
Mark
Thanks very much for the detailed explanation.
Customer service above and beyond.
I think I understand - only have to program the logic into my app and create the excel exports to see if it all works out correctly.
Regards
You're welcome, Derek. Please let us know if you have any questions.
Cheers
