Airbnb Investing: An Accounting Guide for Airbnb Income in QuickBooks

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Who should read this guide?

This is an accounting guide for those who own one or more Airbnb investment properties. Airbnb investing is a business model where an operator purchases one or more properties and offers them on Airbnb for the purpose of building equity much faster than a traditional rental business. As such, this business model thrives in markets where Airbnb short-term income potential is far higher than local long-term rental prices. Keeping a close eye on your numbers with an automated accounting system will make a great difference in navigating the success of your ongoing operations. In this guide, we’ll be focusing on accounting for all income received by Airbnb from an investor perspective, including how to automate Airbnb revenue accounting using QuickBooks.

NOTE: In this guide, we only cover income accounting, not costs. For a guide about Airbnb costs and chart of accounts to consider, check out this guide instead: Airbnb Costs and Chart of Accounts to Consider

What you’ll get from this guide?

  1. A template for QuickBooks with detailed chart of accounts
  2. Learn how to automate Airbnb investment accounting with Bnbtally
  3. Execute common transaction workflows in QuickBooks
  4. Generate monthly reports for you and your firm

Cash Flow Diagram

Who should not read this guide?

There are other business models that may be more suitable in your particular scenario, which are covered better in the following guides:


Airbnb Investing: QuickBooks Chart of Accounts for Airbnb Income

Here we’ll describe our QuickBooks chart of accounts template for Airbnb income in great detail:

Account Codes

No. AccountType
24000Rental LiabilityLiability
24200Rental Liability: Airbnb Custom Taxes PayableLiability
42000Rental RevenueRevenue
42100Rental Revenue: Airbnb Income – Accommodation FareRevenue
42200Rental Revenue: Airbnb Income – Cleaning FeeRevenue
42300Rental Revenue: Airbnb Income – Resolution AdjustmentRevenue
42400Rental Revenue: Airbnb Refund – Accommodation FareRevenue
42500Rental Revenue: Airbnb Refund – Cleaning FeeRevenue
42600Rental Revenue: Airbnb Refund – Resolution AdjustmentRevenue
51000Rental CostsCost of Service
51100Rental Costs: Airbnb Service FeeCost of Service
61100Airbnb Tax WithholdingsExpense

NOTE: In this guide, we only cover income accounting, not costs. For a guide about Airbnb costs and chart of accounts to consider, check out this guide instead: Airbnb Costs and Chart of Accounts to Consider

Detailed Explanation of Accounts

Click to expand and learn more about any particular account type.

Rental Liability

24000 – Rental Liability – This is a parent account with child accounts that account for rental liabilities.

24200 – Rental Liability: Airbnb Custom Taxes Payable – This represents all Custom Taxes collected from Airbnb and payable to a tax authority.

Rental Revenue

42000 – Rental Revenue – This is a parent account with child accounts that account for rental revenue.

42100 – Rental Revenue: Airbnb Income – Accommodation Fare – This account tracks the accommodation fare portion of each Airbnb reservation. The accommodation fare is equal to the number of nights multiplied by the average nightly rate of each reservation.

42200 – Rental Revenue: Airbnb Income – Cleaning Fee – This account tracks the cleaning fee portion of each Airbnb reservation.

42300 – Rental Revenue: Airbnb Income – Resolution Adjustment – This account tracks any resolution adjustments collected from Airbnb.

42400 – Rental Revenue:Airbnb Refund – Accommodation Fare – This account tracks accommodation fare refunds executed by Airbnb.

42500 – Rental Revenue: Airbnb Refund – Cleaning Fee – This account tracks cleaning fee refunds executed by Airbnb.

42600 – Rental Revenue: Airbnb Refund – Resolution Adjustment – This account tracks resolution adjustment refunds executed by Airbnb.

Rental Costs

51000 – Rental Costs – This is a parent account with child accounts that account for rental costs.

51100 – Rental Costs: Airbnb Service Fee – This account tracks service fee costs from Airbnb for each reservation, which is subtracted from the income.

61100 – Airbnb Tax Withholdings – This account tracks any taxes withheld by Airbnb for income tax obligations. This is very rare and usually due to the Airbnb account holder lacking tax identification information. Ideally, this account should not contain any balance and is seldom (if ever) used. To avoid income tax withholdings from Airbnb, be sure to update your Airbnb account with your tax identification information and verify your account.

Accounts not included in this template

For the scope of this guide, we’re mainly focused on Airbnb revenue recognition. It is important to point out that our template does not include many general accounts. We also make reference to some accounts not included in this particular template, which we’ll list here:

  • 11000 – Airbnb Payment Clearing Account – This account is created by Bnbtally but is not included in this template in particular. This account is used to apply payments to Airbnb invoices upon the day the Airbnb reservation payout is posted. Payouts can take 3-5 days (or longer) to arrive in the bank account after posted from Airbnb. Monies owed are held in this clearing account until the payouts are received in the bank. This account also helps to automate the reconciliation process in QuickBooks.
  • 1XXXX – Operations Bank Account – This is your business operations bank account set up with your financial institution. It’s a cash asset account to facilitate your Airbnb Arbitrage day-to-day business operations.
  • 2XXXX – Mortgage Principal – This account is a long-term liability account used to track the mortgage loan principal owed.
  • 7XXXX – Mortgage Interest – This account is an expense account and is used to track the interest payments of the mortgage loan.

Quick Setup Steps

Here’s how to import the above chart of accounts template. The chart of accounts discussed in this article can be imported into QuickBooks automatically using Bnbtally’s setup tools. Here’s how to access this utility…

  1. If you haven’t already, Sign Up to Bnbtally. It includes free use of this template.
  2. Once registered, go to the Connections manager in Bnbtally. Connect your Airbnb account, connect your QuickBooks Online account and then create a connection between the two.
  3. Within the Connection settings, select “Set Up QuickBooks”
  4. This is the QuickBooks setup utility, from here, select the tab “Airbnb Investment Property” to import the template from this article.

How to Automate Airbnb Revenue Accounting

Every reservation received from Airbnb can be reconciled automatically – in great detail – using Bnbtally. In this section, we’ll discuss Bnbtally, how to automating Airbnb revenue accounting and the presets offered by Bnbtally for Airbnb investment properties, which use the chart of accounts discussed above.

Bnbtally Listing Presets

In Bnbtally, once you’ve connected your Airbnb & QuickBooks account, you’ll then be guided to set up the accounting rules for each listing. When you select to edit the rules for a particular listing, Bnbtally will provide presets from our chart of accounts template, which can be loaded to facilitate a quick setup.

Explanation of Preset Lines

100% of all collections from Airbnb is allocated as yours. This includes the accommodation fare, cleaning fee, Airbnb service fee (subtracted), any resolution adjustments, custom taxes (optional) and tax withholdings (if they exist)

Airbnb Price Item%Account
Accommodation Fare100%42100 – Rental Revenue: Airbnb Income – Accommodation Fare
Cleaning Fee100%42200 – Rental Revenue: Airbnb Income – Cleaning Fee
Airbnb Service Fee100%51100 – Rental Costs: Airbnb Service Fee
Resolution Adjustment100%42300 – Rental Revenue: Airbnb Income – Resolution Adjustment
Custom Taxes100%24200 – Rental Liability: Airbnb Custom Taxes Payable
Tax Withholdings100%61100 – Airbnb Tax Withholdings
Example Reservation

Let’s say you have Bnbtally set up for this listing using the preset settings above. Let’s say Airbnb sends a payout for a current reservation with the following itinerary price items:

  • Accommodation Fare: $2000
  • Cleaning Fee: $300
  • Airbnb Service Fee: -$60
  • Airbnb Transient Occupancy Taxes: $200
  • Reservation Total: $2440

Bnbtally accounts for all the income received by Airbnb, separating out each price item. The total amount to be received from Airbnb for this reservation is $2440, which is allocated to the Airbnb Payment Clearing Account to be later reconciled against the resulting bank deposit.

AccountDebitCredit
42100 – Rental Revenue: Airbnb Income – Accommodation Fare$2000
42200 – Rental Revenue: Airbnb Income – Cleaning Fee$300
51100 – Rental Costs: Airbnb Service Fee$60
24200 – Rental Liability: Airbnb Custom Taxes Payable$200
11000 – Airbnb Payment Clearing Account (Asset)$2440

Finally, on the date the reservation payout is received from Airbnb into your Operations Bank Account (3-5 days later), a bank rule in QuickBooks can automatically reconcile the amount back to the Airbnb Payment Clearing Account:

AccountDebitCredit
1XXXX – Operations Bank Account$2440
11000 – Airbnb Payment Clearing Account (Asset)$2440

Set Invoice Customer & Class Categories

Finally, in your Bnbtally listing rules, we recommend to set a general customer (e.g. “Airbnb Guests”) as the customer of the invoice. We also recommend to set the class category of each line item as “Arbitrage: Listing Address” which means you should create two class categories in QuickBooks for this listing, one class category is “Arbitrage” (set as the parent class) and the other class category for the listing address (set as the sub-class).

Automate Additional Bills & Invoices (Optional)

With Bnbtally, you’re also able to automate the creation of additional bills and invoices for each reservation. Consider the following:

  • Create a bill to set amounts payable to a tax authority for each reservation.
  • Create a bill to set amounts payable to a cleaning service for turnover of each reservation.
  • Create additional invoice to set amounts receivable by any third party for each reservation.

Quick Setup Steps

All of the above settings can be quickly set up using Bnbtally’s presets for your listings. Here’s how to set up these presets…

  1. If you haven’t already, Sign Up to Bnbtally.
  2. After logging into Bnbtally, set up your connections, then go to Listing Rules.
  3. Select any listing you’d like to automate that hasn’t already been set up.
  4. Upon selection, a popup will display, select “Load Presets”.
  5. In the next menu, select “Airbnb Investment Property”.

From here, presets will be loaded as your listing accounting rules and you can edit as needed.


Airbnb Investment: Common Transaction Workflows in QuickBooks

In this section, we describe the common transaction workflows as needed for Airbnb investment properties.

Making a Mortgage Payment

A common transaction workflow to identify is paying your mortgage, which includes a principal amount plus interest.

Example Transaction

You, the Airbnb investor, are making a mortgage payment in the amount of $2000, whereas $500 of which is considered interest. This is for the property located at 212 Chantilly Way through a recurring bank transaction which happens monthly. Once the transfer is posted and complete, reconcile the outgoing transaction from the Operations Bank Account using the following entry:

DebitCreditClass Category
1XXXX – Operations Bank Account (Asset)$2,000Investment: 212 Chantilly Way
2XXXX – Mortgage Principal$1,500Investment: 212 Chantilly Way
7XXXX – Mortgage Interest$500Investment: 212 Chantilly Way

1. Create a Recurring Bill

VendorCategoryDescriptionAmountClass
Mortgage Company2XXXX – Mortgage Principal“Mortgage Principal Payment”$1,500Investment: 212 Chantilly Way
Mortgage Company7XXXX – Mortgage Interest“Mortgage Interest Payment”$500Investment: 212 Chantilly Way

2. Pay the Bill

Pay the Bill directly in QuickBooks or reconcile the Bill against the payment made in your bank feed.

Remitting Custom Taxes

In many jurisdictions, Airbnb will collect taxes and remit to local tax authorities on your behalf. However, you can opt to collect these taxes from Airbnb and remit them directly. If you’re using Bnbtally, the Custom Taxes line item found in our presets will take care of the allocation of custom taxes for each reservation. This section is about paying the local tax authorities the amounts owed.

Example

The listing, 462 Atlas Way, is set up on Airbnb to receive custom taxes for all reservations. In Bnbtally, these amounts are allocated to “24200 – Rental Liability: Airbnb Custom Taxes Payable”. After running a balance sheet report on this listing in QuickBooks, you see that $200 is owed for transient occupancy taxes.

First, you’ll need to send your payment to the tax authority either via bank transfer, ACH, check or other means. Once the transaction is posted and complete, record the outgoing transaction from the Operations Bank Account using the following entry:

DebitCreditClass Category
1XXXX – Operations Bank Account (Asset)$200Investment: 462 Atlas Way
24200 – Rental Liability: Airbnb Custom Taxes Payable$200Investment: 462 Atlas Way

1. Check how much exists in the Custom Taxes Payable account for the property

The amount that needs to be paid to the tax authority can be found in the balance sheet. Filtering the balance sheet by the class for each listing, look up the total amount under “24200 – Rental Liability: Airbnb Custom Taxes Payable”.

2. Create Bill

VendorCategoryDescriptionClass
Tax Authority24200 – Rental Liability: Airbnb Custom Taxes Payable“Taxes Paid: 11% City TOT”Investment: 462 Atlas Way
  • Set the vendor of the bill to the name of the tax authority
  • Set the Product/Service to “24200 – Rental Liability: Airbnb Custom Taxes Payable”
  • Set a detailed description, starting with “Taxes: ” and describe the tax
  • Set the class to the listing

3. Transfer the amount from your operations bank account to the tax authority

Send the money via bank transfer, ACH, check or other means.

4. Reconcile operations bank account statement line amount with bill

Reconcile the bill with the bank feed in QuickBooks


Monthly Reporting of Airbnb Investments

Now that our data is automatically processed from Airbnb and perfectly synced into QuickBooks, once you’ve reconciled any additional expenses, it’s quite simple to produce beautiful monthly reports to observe the performance of each listing.

Profit & Loss by Class

This report is meant for internal purposes to view side-by-side, displaying the profitability of each listing for your Airbnb investment operations. This report is found under QuickBooks “Reports” as “Profit and Loss by Class”:


Conclusion

In the right climate and in the right location, Airbnb can be an amazing way to build equity quickly in your investment properties. However, you’ll need to understand your numbers to determine which properties are fruitful and to make better decisions with your real estate portfolio.

Overall, the accounting method discussed in this article provides a great deal of transparency into the success of your operations. We hope that you’ve received great value from this guide as you build your firm. To begin automating Airbnb investment accounting, check the link below:

Finally, there are other business models that are not covered in this guide but are covered better in the following guides. Be sure to check these out:

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