Q: Hello Gita. I’m an Advanced QuickBooks ProAdvisor with a property management client. We’ve set up our items to differentiate between residential and commercial income. On the top of the invoice screen, there is another drop down menu set for A/R. Should we set up a sub account for commercial and residential property as well?

Unfortunately, I need to separate the income and accounts receivable for commercial and residential property. In New York, there is a special real estate tax filed for commercial properties, so most accounts want income and accounts receivable separated to easily calculate this tax.

A: When you create multiple Accounts Receivable accounts, it makes it difficult and complicated when you receive payments towards the invoices. Instead I would recommend use only one Accounts Receivable account. Create two additional items separating the residential rental and commercial rental, which you can then make them taxable or non-taxable.

If you would like to track how much is owed or earned from residential income and commercial income, you can create a customized report by the item. Or you can use Class to separate the income and accounts receivable for commercial and residential properties and modify your reports accordingly.

A quick note – just try this in a sample file and review your customized report.