Prepayments - Manually applying early prepayments to a future balance

Example: You require a tenant to pay first and last month's rent upon move in. The portion of the payment that includes last month's rent will be held until the last month of the lease, when you will withhold it to apply to the rent charge.

1. Receive the payment. Allocate the portion of the payment for first month's rent to Rent income. Allocate the portion of the payment meant for last month's rent to Last month's rent liability.

2. Add a charge to the ledger. The charge's date will be the same day that the payment was received. The charge's amount will be the same amount that was allocated to last month's rent. Allocate the charge to Last month's rent liability.

3. When the last month of the tenant's lease arrives, Buildium will automatically add a charge either on or around the due date, depending on your posting date settings.

4. Withhold the Last month's rent liability and convert it to Rent income. The date of this transaction should match the last month's rent charge. The amount is the same amount that was allocated to last month's rent, too.

Once this last transaction is done, you will have a $0 outstanding balance. The total for Last month's rent liability on the Deposits page will also be $0.

Example: Justin Jacobs paid his January rent in December, but his rental owner would prefer to recognize the income in January for tax purposes.

1. Receive the payment. Allocate the early payment meant for January's rent to prepaid rent liability.

2. Add a charge to the ledger. The charge's date will be the same day that the payment was received. The charge's amount will be the same amount that was allocated to January's rent. Allocate the charge to prepaid rent liability.

   When this happens, the lease ledger will look something like the following animation. Notice how there is a $0 balance on both the ledger by date and the ledger by account. This is a good thing; before we began this work, we had the same balance. Because they match, we can tell that everything has been done correctly.

   We also have $1,275 on the Deposits page.

3. On or about January 1, Buildium will automatically add a charge for January rent.

4. Withhold the prepaid rent liability and convert it to rent income. The date of this transaction should be January 1. The amount is the same amount that was allocated to January's rent.

   Once this last transaction is done, you will have a $0 outstanding balance. The total for prepaid rent liability on the Deposits page will also be $0.

Anita Association paid six months of association fees in advance. The board would prefer to recognize the income over time.

1. Receive the payment. Allocate the portion of the payment for this month's association fees to association fee income. Allocate the portion of the payment meant for future month's fees to prepaid association fees.

   If you don't have a prepaid association fees account, you can add one on your chart of accounts. Create the account as a current liability.

2. Add a charge to the ledger. The charge's date will be the same day that the payment was received. The charge's amount will be the same amount that was allocated to future fees.

   When this happens, the ledger will look something like the following pictures. Notice how there is a $0 balance on both the ledger by date and the ledger by account. This is a good thing; it shows that we correctly allocated the charge and payment.

   We also have the $900 that was prepaid on the Deposits page.

3. On or about 1st of each month (or quarter, or year), Buildium will automatically add a charge for association fees.

4. Withhold the prepaid association fees and convert it to association fee income. The date of this transaction should be the first of each month. The amount is the same amount that was allocated to the month's fees.

   Once this last transaction is done, you will have a $0 outstanding balance. The total for prepaid association fees on the Deposits page will reflect the applied deposit.