What kind of account would this be?

DaveBDaveB Member Posts: 9

I am new to Wave and, having outgrown the spreadsheet approach to managing two small businesses, I'm giving Wave a go.
One of my businesses is a cottage rental, which involves an "account" with what is essentially a property and rental management company. I receive monthly statements, which (to simplify) include:

  • Any expenses incurred, that my business must pay
  • Rental income collected that is owed to my business
  • Net difference that is owed to my business, or that my business must pay

The monthly income/expense total is then paid directly to/from the bank account (already linked to Wave) for my business. I'd like to add this "Rental Management Account" to my Chart of Accounts in order to track and properly categorize the transactions occurring on those monthly statements, but I'm not certain what Account Type to assign to it.

To me, while this is not a traditional bank account, it does exhibit the behavior of one. So, it seems like I would add it as a "Cash and Bank" account - thereby allowing me to manually enter the transactions from each monthly statement, and when the net statement amount would be a transfer between that and the business' actual bank account.

This is simply what I've puzzled-out by thinking about it a bit, and simply want to validate my thinking with the community.
Is this a valid/correct approach? Is there another, and possibly better approach to consider?

Thanks in advance to anyone who providing advice!

Comments

  • JordanFromWaveJordanFromWave Administrator Posts: 219 admin

    Hi @DaveB and thanks for reaching out to the community.

    While this does not sound like a traditional Cash and Bank account, if this is a real account to hold funds and is used for expenses and income, it is likely best created as a Cash and Bank account. This will allow you to use the account for income and expenses, and also assign it as a payment account if necessary. When you opened this bank account with your financial institution, what type of account type was it? (i.e. business checking, savings, etc.) This will further help to clarify how it should appear within your chart of accounts.

  • DaveBDaveB Member Posts: 9

    Hi @JordanFromWave, and thanks for your reply.

    To answer your question, it is not an account at a financial institution, so it is neither a chequing or savings account. It is, for lack of a better description, and "Owner's Account" with a property/rental management company. They are essentially an vendor servicing my business, managing some of the maintenance, and short-term rentals for a seasonal cottage. I do not transfer money to or from the Owner's account. Which is to say that I can't make an arbitrary deposit or withdrawal of funds. Each month, I either have to pay a balance owed, or receive the net rental revenue (after some expenses).

    That said, the withdrawals and deposits against my actual bank account (already in my chart of accounts), is really the net result of the expense and income activity on the monthly statement form the management company which come to me as a PDF.

    The monthly statement shows expenses (like refilling the barbecue propane tank), and rental income (breaking down gross rental income, and associated fees).

    So, the key problem I'm trying to solve is capturing the detail of the expense and income activity represented on each monthly statement.

    Not being an accountant, treating the Owner's Account as a Bank Account would would seem to achieve what I want. I don't know if it is either incorrect to do so, or there is a better approach.

    edited January 8, 2019
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