Managing the finances for your short-term rental (STR) business can feel overwhelming, especially if bookkeeping isn’t your thing. But keeping your finances in order is essential if you want to maximize profits, stay tax-compliant, and scale your rental business stress-free. The good news? You don’t need to be a finance expert to track your STR business finances like a pro!
I’m going to show you a simple, streamlined approach to managing your rental income, expenses, and bookkeeping (without the headache).
Why It’s Important to Properly Track Your STR Business Finances
Many STR owners start out thinking they can track their finances manually in a spreadsheet, and I get it I was one of them too. But that quickly leads to missed deductions, inaccurate reporting and tax season nightmares.
Instead, by implementing a solid financial system, you’ll:
- ✔️ Know exactly how much profit you’re making after expenses
- ✔️ Easily track deductions and reduce your tax burden
- ✔️ Be prepared for an IRS audit (without stress!)
- ✔️ Make smarter decisions to scale your rental portfolio
1️⃣ Separate Your STR Finances from Personal Accounts
🔹 Mark, a first-time Airbnb host, used his personal bank account for rental income and expenses. When tax time came, sorting through his transactions was a nightmare, and he missed out on thousands of dollars in deductions because he couldn’t properly track his business expenses.
🚀 Solution:
- ✅ Open a separate business bank account for all STR transactions
- ✅ Get a business credit card and use it exclusively for rental-related expenses
- ✅ Automate income deposits so rental platform payouts go directly into your business account
- ✅ Automate expenses so any purchases or subscriptions for your rentals are charged directly to your business credit card
2️⃣ Use Accounting Software to Track Income & Expenses
🔹 Lisa owned three vacation rentals but relied on spreadsheets to track her finances. She constantly forgot to record expenses, making it impossible to see her true profit at the end of the year.
🚀 Solution:
- ✅ Use QuickBooks Online to automate transaction tracking
- ✅ Sync your bank accounts and Airbnb/VRBO payouts so income is recorded automatically
- ✅ Categorize expenses properly to align with Schedule E (cleaning fees, maintenance, utilities, etc.)
💡 Pro Tip: If you have multiple properties that you own make sure you go with the QuickBooks Plus plan to utilize class/location tracking. If you want a done-for-you system, my QuickBooks Setup Course for STR Owners walks you through everything step by step!
3️⃣ Categorize STR Expenses the Right Way
Incorrectly tracking your expenses can cost you big money in lost deductions. The IRS allows many rental-related expenses to be deducted, but only if they are properly categorized.
📌 Key Expenses Categories to Track:
- ✔️ Cleaning: Housekeeping and cleaning fees
- ✔️ Repairs & Maintenance: Ongoing maintenance, repairs, and routine upkeep
- ✔️ Utilities & Subscriptions: Internet, electricity, streaming services for guests
- ✔️ Mortgage Interest: Interest you pay every month on your mortgage loan
- ✔️ Property Taxes: Deductible if you own the property
- ✔️ Marketing & Listing Fees: Airbnb, VRBO and paid ads
- ✔️ Depreciation: A huge tax benefit for property owners
🚀 Solution:
- ✅ Set up custom categories in QuickBooks to align with Schedule E and track STR-related expenses
- ✅ Keep digital copies of receipts for all expenses (use the QuickBooks mobile app!)
- ✅ Run monthly reports to see where your money is going and optimize spending
4️⃣ Automate Tax Prep & Avoid IRS Issues
🔹 Jen, a short-term rental owner, didn’t set aside money for taxes and was blindsided by a $15,000 tax bill at the end of the year. She had to take out a loan just to cover what she owed. The sad thing is – if she’d actually tracked her expenses and taken all the available deductions she wouldn’t have owed anything in taxes and even would have gotten a little bit of a tax refund.
🚀 Solution:
- ✅ Set aside 25-30% of rental income for taxes in a reserve account just in case
- ✅ Pay quarterly estimated taxes to avoid penalties
- ✅ Use QuickBooks to generate 1099s and financial reports that make tax filing easy
- ✅ Work with both a real estate tax professional and a real estate bookkeeper who understand STR deductions and depreciation to get all available deductions
5️⃣ Run Monthly Reports to Monitor STR Profitability
Tracking your finances isn’t just about taxes – it’s about knowing your numbers you can make smarter business decisions.
📌 Essential STR Financial Reports:
- ✔️ Profit & Loss Statement – Shows income, expenses and your net profit
- ✔️ Balance Sheet – Provides an overview of assets, liabilities, and equity
- ✔️ Cash Flow Statement – Tracks how money is moving in and out of your business
🚀 Solution:
- ✅ Set a monthly “Finance Day” on your calendar to review reports and make adjustments
- ✅ Use QuickBooks Online to generate real-time financial insights about each of your properties profitability
- ✅ Identify areas where you can cut costs and increase profitability
Final Thoughts: Take Control of Your STR Finances Now
It doesn’t have to be stressful to track your STR business finances. By setting up the right financial systems, you’ll maximize profits, stay tax compliant, and set your business up for long-term success.
📌 Next Steps: Get Your STR Finances in Order with My QuickBooks Setup Course!
Want a plug-and-play system for STR bookkeeping? I’ve got you covered. Join my QuickBooks Setup Course for STR Owners and get organized in just 2 days!
👉 Enroll Now and take control of your rental finances!
Helpful External Resources
🔗 IRS Guide on Rental Income & Deductions
🔗 QuickBooks Online – Plus Plan