Why should you read this guide?
This is a guide for Airbnb property management accounting and automation using Xero. Airbnb property management continues to be a profitable industry with persistent growth potential. And it turns out that many regions do not have strict trust accounting or licensing requirements to operate short-term stays on behalf of owners. This means that in many regions, any person can get into Airbnb property management without being blocked by bureaucracy.
In this guide, we discuss accounting automation, integrating Airbnb & Xero and an accounting method that avoids the complexity of trust accounting for those seeking an alternative. Rather than using a trust account, which requires a great deal of accounting overhead, all amounts received by Airbnb are declared as income to the property management company and all amounts paid out to owners are declared as a cost.
Unlike traditional trust accounting, which requires a lot of tedious data entry and training to maintain, this straightforward method can be much simpler. There are two main reasons why this type if bookkeeping attracts so many: first, you only need a third as much data entry and training compared to your conventional counterparts; secondly, the Airbnb property management company can claim higher incomes which helps obtain larger business loans.
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DISCLAIMER: If you are operating in a jurisdiction that has legal requirements for Airbnb property managers to use a trust account, the accounting method discussed in this guide is not for you. There are plenty of jurisdictions that consider property managers as custodians with a fiduciary responsibility to the property owner, which requires a more comprehensive trust accounting method.
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
Table of Contents
What you’ll get from this guide:
- A Xero template for this method of Airbnb Property Management
- Learn how to automate Airbnb property management accounting with Tallybreeze
- Execute common transaction workflows in Xero
- Generate monthly owner statements and reports for your clients
Cash Flow Diagram
Who should not read this guide?
Other business models exist. Some may be more suitable in your particular case. These are covered better in the following guides:
- Trust Accounting for Airbnb Property Managers using Xero
- Airbnb Co-Host Accounting in Xero
- Airbnb Arbitrage Accounting in Xero
- Airbnb Investment Accounting in Xero
- All Airbnb templates for Xero
- Airbnb Accounting & Bookkeeping: A Comprehensive Guide
Airbnb Property Management: Xero Chart of Accounts for Airbnb Income
We will now describe our chart of accounts template in great detail. With this setup, you can create a highly organized system to keep track and manage all revenue from Airbnb listings.
Account Codes
| No. | Account | Type |
|---|---|---|
| 24100 | Rental Liability – Airbnb Owner Funds Payable | Liability |
| 24200 | Rental Liability – Airbnb Custom Taxes Payable | Liability |
| 42100 | Rental Revenue – Airbnb Income – Accommodation Fare | Revenue |
| 42200 | Rental Revenue – Airbnb Income – Cleaning Fee | Revenue |
| 42300 | Rental Revenue – Airbnb Income – Resolution Adjustment | Revenue |
| 42400 | Rental Revenue – Airbnb Refund – Accommodation Fare | Revenue |
| 42500 | Rental Revenue – Airbnb Refund – Cleaning Fee | Revenue |
| 42600 | Rental Revenue – Airbnb Refund – Resolution Adjustment | Revenue |
| 51100 | Rental Costs – Airbnb Service Fee | Direct Cost |
| 51200 | Rental Costs – Airbnb Amounts Due to Owner | Direct Cost |
| 61100 | Airbnb Tax Withholdings | Expense |
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
Airbnb Property Management businesses that do not use a trust account to manage funds – such as described in this article – must instead use their business operations accounts for collection of Airbnb funds and payouts to owners. As such, you’ll notice in this template that the amounts paid out to owners are considered a cost to the business. The costs are traced by “51200 – Rental Costs – Airbnb Amounts Due to Owner” and balanced by a liability account called “24100 – Rental Liability – Airbnb Owner Funds Payable”. Read further below to learn more about any particular account.
Rental Liabilities
24100 – Rental Liability – Airbnb Owner Funds Payable – This account tracks Airbnb funds payable to owners. This is for property management businesses that do not use a trust account to manage funds.
24200 – Rental Liability – Airbnb Custom Taxes Payable – This represents all Custom Taxes collected from Airbnb and payable to a tax authority.
Rental Revenues
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
51100 – Rental Costs – Airbnb Service Fee – This account tracks service fee costs from Airbnb for each reservation, which is subtracted from the income.
51200 – Rental Costs – Airbnb Amounts Due to Owner – This account tracks amounts paid to owners as a cost to the business. This account is for property management businesses that do not use a trust account to manage funds.
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 Tallybreeze (formerly 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 Xero.
- 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 property management company’s day-to-day business operations.
- 4XXXX – Billable Expenses Income – This is a general account for capturing income received for the payment of billable expenses by owners, which may include a markup.
- 7XXXX – Billable Expenses – This is a general account for tracking billable expenses for any owners.
Quick Setup Steps
Here’s how to import the above chart of accounts template. All of the accounts discussed in this article can be imported into Xero automatically using Tallybreeze’s setup tools. Here’s how to access this utility…
- If you haven’t already, Sign Up to Tallybreeze. It includes free use of this template.
- Once registered, go to the Connections manager in Tallybreeze. Connect your Airbnb account, connect your Xero account and then create a connection between the two.
- Within the Connection settings, select “Set Up Xero”
How to Automate Airbnb Property Management Accounting
Tallybreeze (formerly Bnbtally) accounting automation allow you to automatically process Airbnb payments and separate payout allocations between the property management company and owners, keeping track of all reservation details. A reservation made from Airbnb is automatically pulled and recorded in Xero following the rules you set in the software. We’ll discuss this feature further along with how it works using the chart of accounts discussed above.
Tallybreeze Listing Presets
Once you’ve completed connecting your Airbnb and Xero accounts, Tallybreeze (formerly Bnbtally) will guide you through the process of setting up accounting rules for each listing. To help speed up the setup process, Tallybreeze gives you a selection of presets for a quick configuration. After selecting your particular business model for Airbnb Property Management, the presets below can be broken down into two main groups: Lines 1-6 and Lines 7-10.
Explanation of Preset Lines
To learn more about each preset group, click on the corresponding dropdown.
Lines 1-6: All amounts received by Airbnb are 100% allocated as revenue
This group of lines maps all line items from Airbnb as income and costs to the business. This includes the accommodation fare, cleaning fee, Airbnb service fee (cost), any resolution adjustments, custom taxes (optional) and tax withholdings (if they exist)
| Airbnb Price Item | % | Account |
|---|---|---|
| Accommodation Fare | 100% | 42100 – Rental Revenue – Airbnb Income – Accommodation Fare |
| Cleaning Fee | 100% | 42200 – Rental Revenue – Airbnb Income – Cleaning Fee |
| Airbnb Service Fee | 100% | 51100 – Rental Costs – Airbnb Service Fee |
| Resolution Adjustment | 100% | 42300 – Rental Revenue – Airbnb Income – Resolution Adjustment |
| Custom Taxes | 100% | 24200 – Rental Liability – Airbnb Custom Taxes Payable |
| Tax Withholdings | 100% | 61100 – Airbnb Tax Withholdings |
Lines 7-10: Allocate 80% of the accommodation fare and service fee as a cost payable to the owner.
This group of lines allocates 80% of the accommodation fare to the owner, it also allocates 80% of the Airbnb service fee, which is subtracted from the amounts owed to the owner.
| Airbnb Price Item | % | Account |
|---|---|---|
| Accommodation Fare | -80% | 51200 – Rental Costs – Airbnb Amounts Due to Owner |
| Accommodation Fare | 80% | 24100 – Rental Liability – Airbnb Owner Funds Payable |
| Airbnb Service Fee | -80% | 51200 – Rental Costs – Airbnb Amounts Due to Owner |
| Airbnb Service Fee | 80% | 24100 – Rental Liability – Airbnb Owner Funds Payable |
Example Reservation
Let’s say you have Tallybreeze 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: $3000
- Cleaning Fee: $400
- Airbnb Service Fee: -$100
- Airbnb Transient Occupancy Taxes: $300
- Reservation Total: $3600
First, Tallybreeze 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 $3600, which is allocated to the Airbnb Payment Clearing Account to be later reconciled against the resulting bank deposit.
| Account | Debit | Credit |
|---|---|---|
| 42100 – Rental Revenue – Airbnb Income – Accommodation Fare | $3000 | |
| 42200 – Rental Revenue – Airbnb Income – Cleaning Fee | $400 | |
| 51100 – Rental Costs – Airbnb Service Fee | $100 | |
| 24200 – Rental Liability – Airbnb Custom Taxes Payable | $300 | |
| 11000 – Airbnb Payment Clearing Account (Asset) | $3600 |
Next, within the same invoice, Tallybreeze calculates 80% of the Accommodation Fare ($3000 * 80% = $2400) and marks it as a cost payable to the owner. Then, Tallybreeze (formerly Bnbtally) calculates 80% of the Airbnb Service Fee (-$100 * 80% = -$80), subtracts this amount from the cost and removes it from what’s owed to the owner:
| Account | Debit | Credit |
|---|---|---|
| 51200 – Rental Costs – Airbnb Amounts Due to Owner | $2400 | |
| 24100 – Rental Liability – Airbnb Owner Funds Payable | $2400 | |
| 51200 – Rental Costs – Airbnb Amounts Due to Owner | $80 | |
| 24100 – Rental Liability – Airbnb Owner Funds Payable | $80 |
Finally, on the date the reservation payout is received from Airbnb into your Operations Bank Account (3-5 days later), a bank rule in Xero can automatically reconcile the amount back to the Airbnb Payment Clearing Account:
| Account | Debit | Credit |
|---|---|---|
| 1XXXX – Operations Bank Account | $3600 | |
| 11000 – Airbnb Payment Clearing Account (Asset) | $3600 |
Set Invoice Customer & Class Categories
In your Tallybreeze settings, we recommend that you set the owner as the contact for each invoice. You should also create a tracking category named “Listing” with an option for each listing indicating the owner of the listing and identifying the listing itself. See below example:
Automate Additional Bills & Invoices (Optional)
With Tallybreeze, you’re also able to automate the creation of additional bills and invoices for each reservation. Consider the following:
- Create a bill to set payouts payable to the property owner for each reservation.
- 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 Tallybreeze’s presets for your listings. Here’s how to set up these presets…
- If you haven’t already, Sign Up to Tallybreeze.
- After logging into Tallybreeze, set up your connections, then go to Listing Rules.
- Select any listing you’d like to automate that hasn’t already been set up.
- Select “Load Presets”.
From here, presets will be loaded as your listing accounting rules and you can edit as needed.
Airbnb Property Management: Common Transaction Workflows in Xero
There are several other types of transactions in Xero for Airbnb Property Management, and you’ll need to account for them all. We list some common workflows here!
Paying Owners
To find out how much you owe to an owner, look at the balance sheet and filter it selecting the proper tracking category for the owner. Then check the balance found under “24100- Rental Liability – Airbnb Owner Funds Payable”, the amount that needs to be paid pertains specifically within this account.
Example Transaction
You, the Airbnb property management company, are holding funds under “24100 – Rental Liability – Airbnb Owner Funds Payable” account in the amount of $15,000 for the owner, Jessica Lamb, for the listing 443 St. Adams Blvd. You’d like to pay this amount to the owner as a result of a month-end report.
First, you’ll need to send the owner the money via bank transfer, ACH, check or other means. Once the transfer is posted and complete, reconcile the outgoing transaction from the Operations Bank Account using the following entry:
| Debit | Credit | Tracking Category | |
|---|---|---|---|
| 1XXXX – Operations Bank Account (Asset) | $15,000 | Jessica Lamb – 443 St. Adams Blvd. | |
| 24100 – Rental Liability: Airbnb Owner Funds Payable | $15,000 | Jessica Lamb – 443 St. Adams Blvd. |
Detailed instructions for Xero
1. Find the amount to pay
The amount that needs to be paid to each owner can be found in the balance sheet. Filtering the balance sheet by the class for each owner, look up the total amount under “24100 – Rental Liability – Airbnb Owner Funds Payable”.
2. Create Bill
| Contact | Account | Description | Tracking Category |
|---|---|---|---|
| Jessica Lamb | 24100 – Rental Liability – Airbnb Owner Funds Payable | “Owner Payout” | Jessica Lamb – 443 St. Adams Blvd. |
- Set Contact to the name of the owner
- Set Account to “24100 – Rental Liability – Airbnb Owner Funds Payable”
- Set Description to “Owner Payout”
- Set Amount to the balance found in Step 1.
- Set Tracking Category to owner’s name and listing
3. Transfer the amount from your operations bank account to the owner
Once you’ve verified the amount, go to your bank and send the money via bank transfer, ACH, check or other means.
4. Reconcile bank account amount with bill
Reconcile the bill with the bank feed in Xero
Paying Expenses on Behalf of Owners
When a guest checks in, sometimes problems can be found with the property which the owner is responsible to pay but is not around to purchase. This can happen when there is an issue with maintenance or something else needs fixed right away – such as a backed up sewage pipe or broken faucet.
If your contract with the owner allows, you can make the purchase for these items directly from your operations bank account and subtract the paid amount from what’s owed to the owner under “51200 – Rental Costs – Airbnb Amounts Due to Owner”. See example below:
Example
A property owned by Jessica Lamb needs a bathroom faucet to be replaced by a professional plumber. The service costs a total of $300 and needs to be rectified quickly as there are guests checking in later in the day. You also charge a 20% markup for allocating funds and handling these kinds of issues for the owner.
First, you’ll need to pay the plumbing company from your Operations Bank Account either via bank transfer, ACH, check, Venmo or other means. Once the transaction is posted and complete, record the outgoing transaction from your Operations Bank Account using the following entry:
| Debit | Credit | Tracking Category | |
|---|---|---|---|
| 1XXXX – Operations Bank Account (Asset) | $300 | Jessica Lamb – 443 St. Adams Blvd. | |
| 7XXXX – Billable Expenses (Expense) | $300 | Jessica Lamb – 443 St. Adams Blvd. |
Next, make an entry to deduct the amounts from the amount you owe the owner under “51200 – Rental Costs – Airbnb Amounts Due to Owner”. Include a 10% markup for coordinating & funding the service, and allocate it to your billable expenses income account. Use the following entry:
| Debit | Credit | Tracking Category | |
|---|---|---|---|
| 51200 – Rental Costs: Airbnb Amounts Due to Owner | $360 | Jessica Lamb – 443 St. Adams Blvd. | |
| 4XXXX – Billable Expenses Income (Revenue) | $360 | Jessica Lamb – 443 St. Adams Blvd. |
Detailed instructions for Xero
After paying the service provider, categorize and reconcile the transaction in your operations bank feed. Everything can be allocated in one transaction, including the 20% markup for the billable expense reimbursement to the owner as follows:
| Payee | Account | Description | Amount | Tracking Category |
|---|---|---|---|---|
| Plumber Pro | 7XXXX – Billable Expenses (Expense) | “Billable Expense: Bathroom Faucet Replaced” | $300 | Jessica Lamb – 443 St. Adams Blvd. |
| Plumber Pro | 51200 – Rental Costs – Airbnb Amounts Due to Owner | “Billable Expense: Bathroom Faucet Replaced” | -$360 | Jessica Lamb – 443 St. Adams Blvd. |
| Plumber Pro | 4XXXX – Billable Expenses Income (Revenue) | “Billable Expense: Bathroom Faucet Replaced” | $360 | Jessica Lamb – 443 St. Adams Blvd. |
Remitting Custom Taxes
In most jurisdictions, Airbnb offers to collect transient occupancy taxes for remittance to local tax authorities on your behalf. However, in many regions Airbnb gives you the choice to receive these taxes yourself and have more control over the funds. The Custom Taxes line item in Tallybreeze will catch any taxes collected – our presets are designed for this purpose. You can then pay the local tax authority on your own terms following the below example:
Example
The owner, Jessica Lamb, has a listing at 443 St. Adams Blvd., which Airbnb is set up to receive custom taxes for all reservations. In Tallybreeze, these amounts are allocated to “24200 – Rental Liability – Airbnb Custom Taxes Payable”. After running a balance sheet report on this listing in Xero, you see that $1500 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:
| Debit | Credit | Class Category | |
|---|---|---|---|
| 1XXXX – Operations Bank Account (Asset) | $1,500 | Jessica Lamb – 443 St. Adams Blvd. | |
| 24200 – Rental Liability: Airbnb Custom Taxes Payable | $1,500 | Jessica Lamb – 443 St. Adams Blvd. |
Detailed instructions for Xero
1. Check how much exists in the Custom Taxes Payable account for the owner
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 owner, look up the total amount under “24200 – Rental Liability – Airbnb Custom Taxes Payable”.
2. Create Bill
| Contact | Account | Description | Amount | Tracking Category |
|---|---|---|---|---|
| Tax Authority | 24200 – Rental Liability – Airbnb Custom Taxes Payable | “Taxes: 11% City TOT” | $1,500 | Jessica Lamb – 443 St. Adams Blvd. |
- Set the Contact of the bill to the name of the tax authority
- Set the Account to “24200 – Rental Liability – Airbnb Custom Taxes Payable”
- Set a detailed description, starting with “Taxes: ” and describe the tax
- Set the Tracking Category to the owner’s name and 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 Xero
Monthly Owner Statements & Reports for Airbnb Property Management
Xero is a powerful tool for any small business owner, but it’s even better when you have all your financial data automatically pulled from Airbnb and precisely synced into Xero. Now that this is ready, producing beautiful statements or reports has never been easier!
Monthly Owner Statement by Listing
You will be able to show each owner, in great detail, precisely how much they’ve earned for each listing. The transaction report below provides a snapshot of what they’ve earned during a single month. This statement can be sent out each month so that owners can see how much they’re earning and the value of your services.
The example below is an owner statement for Berry Randalt, which has one listing:
Quick Setup Steps
Here’s how to create the above Owner Statement by Listing in Xero:
- In Xero, go to Reports, select “Account Transactions”.
- Under Accounts, select only the account “Rental Liability – Airbnb Owner Funds Payable”.
- Select the report period (perhaps the previous month).
- Under Columns, uncheck all columns except keep “Date”, “Description” and “Gross”.
- Under Grouping/Summarizing, select “Group by” and “Listing” or whichever you named for your tracking category that identifies your listings.
- Under Filter, only select the listings under the owner you want to report for.
- Sort by Description.
- Customize the title as needed.
- Select “Update”
From here this statement can be saved as a custom report and re-used every month for the owner.
Conclusion
Integrity is the most important quality of an Airbnb property management business – and a streamlined accounting process is key to making this sort of operation manageable. This guide has shown an alternative method to trust accounting. This alternative method is becoming more popular with Airbnb property management companies because it requires much less overhead while still providing the diligence needed for owners. This method also shows a larger income to the property management firm, which in turn allows you to obtain larger business loans.
Regardless, not only does this accounting method provide a great deal of transparency to owners, but it also provides you – the Airbnb property management company – a great deal of transparency into the success of your business. We hope that you’ve received great value from this guide as you build your firm. To begin automating your Airbnb 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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