What is a general ledger?
A general ledger is a master accounting document that provides a complete record of all financial transactions of a business. It typically includes a business’ assets, liabilities, equity, expenses, and income. Azibo can generate a general ledger that contains all relevant rental transactions for an individual property, portfolio, or all of your properties.
What is the general ledger used for?
The general ledger gives you and your CPA a clear view of all the transactions for a specific time period in one large list, as well as the context for those transactions. A general ledger makes it easy for CPAs to review your records in one place and suggest necessary adjustments.
For example, Azibo generates general ledgers that include information like which contacts received or sent payments, categories of transactions, the properties and units the transaction was for, as well as any notes you’ve added for those transactions.
Common bookkeeping mistakes to avoid
Learn common landlord bookkeeping mistakes and how to avoid them to ensure you generate accurate, compliant reports for your rental business.
- Missing rental income and expenses. Import all the income and expenses automatically by linking your bank accounts and credit card accounts. If a handful of transactions are still missing, add them manually.
- Incorrect accounting for mortgage payments. Be sure to split and tag your mortgage payment into principal, interest, and escrow to ensure compliant and accurate reports and taxes. Learn more about Accounting for Mortgage Payments in Azibo
- Improperly categorizing repairs and CapEx. Follow the IRS guidelines on what counts as repairs/maintenance vs. capital expenditures. Learn more in our guide Property Improvements and Repairs: Expense or CapEx?
- Booking security deposits as income. Since security deposits do not count as rental income, they should not be listed on the P&L. Similarly, a returned security deposit is not an expense.
- Reporting expenses before a unit is in service. Costs incurred before your rental business is up and running do not count as operating expenses and should not be included in the P&L. Instead, they are capital expenditures, which have different tax implications.
- Misreporting pre-paid rent. In cash-basis accounting, prepaid rent should always be recognized as income on the date that it’s received, not when it’s due. Learn more about accounting for prepaid rent.
- Not reporting insurance and property tax expenses paid by escrow, or not reporting them at the right time. Insurance or tax expenses covered by escrow should be booked when your lender pays, not at the time of your monthly escrow payments. Make sure you don’t miss them or book them too early. Learn more about expense the insurance when it’s contributed to the escrow account.
- Including owner distributions or contributions. While you might be tempted to list owner distributions (withdrawals from your rental business profits) as expenses, and owner contributions (money taken out of your own pocket to fund your rental business) as income, neither should be listed in the P&L.
Disclaimer: This content has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for accounting or tax advice.