Handling Security deposit returns if you are the Landlord

When you receive the payment for a security deposit, you enter it as a deposit to the security deposit liability account.  So what happens when the tenant moves out?  Perhaps they owed for utilities or maybe the tenant damaged the apartment.  You have to deduct some of the security deposit, but also return the balance.

This is how you do it.  You enter a check to the tenant.  Under account, use the security deposit account and enter that amount in full.  Then tab down to the next line and under the security deposit account, enter the utilities expense as a negative amount.  This will refund your expense account the from the funds that were in the security deposit account.  Tab down again and enter repairs and maintenance account and reimburse your expenses for repairing the unit for damages over normal wear and tear.

Here is a screenshot to show you how the check would look in QuickBooks:

I like to enter notes in the memo line for future reference.  Of course, I always send a cover letter with the check explaining the charges.  When there are repairs or damages to the unit, I also send pictures of the damages so there is no chance that the tenant can complain that they did not know of or cause these damages.  Pictures speak "one thousand" words.   These are also beneficial if you end up in court defending the charges to the security deposit.

(On a side note:  We always fill out a "condition of apartment" form when the new tenant initially  moves into the apartment.  We note any "damages" that occurred prior to the tenant's moving in.  We will also note when there is new carpet, etc.  This paperwork is extremely beneficial if you charge any damages to the security deposit.)

I hope everyone up north stays safe with Hurricane Irene coming up the coast.  We are very happy down here in Southwest Florida that a Hurricane has passed us by.  Hurricanes are not to be messed with.  Stay inside and stay safe.


Courtesy of our colleague Lynda Artesani, Certified QuickBooks ProAdvisor in SW Florida

Reconciliation shows zero in QuickBooks

I entered my entire new bank account's transactions for the month and when I went to do the bank reconciliation, the beginning balance is zero.  It had a beginning balance when I entered the original journal entry to start my new company in QuickBooks.  What did I do wrong?

Nothing, actually.  You just have to reconcile the beginning balance entry to get started:

Enter the beginning balance of the new account as your ending balance

Clear the opening balance transaction (usually on the deposit side).

Once the initial deposit entry is reconciled, you are now all set to do the month's bank reconciliation.

That is really all there is to clearing that initial transaction for your new or newly entered checking account.

Courtesy of our colleague Lynda Artesani, Certified QuickBooks ProAdvisor in SW Florida