Management Fee Types
1. Go To System Tasks
2. Click Control Codes
3. Management Fee Types
These management fees generally refer to the management of a building. If you have separate management fees charged to tenants based on a percentage of rent or recoverable expenses, these are handled at the tenant level and are not handled by Management Fee Types.
To calculate Management Fees, you must:
1. Set up the management company as a supplier
2. Set up the Management Fee Type code
3. Add the management fee code to the building either through the Property Setup Wizard or, if the building has already been set up, on the Building – Accounting screen.
4. Run the Building – Monthly Processes – Management Fee program.
5. Post Invoices Expenses to G/L, Select the Invoice to Pay, and Print Check.
Find Fee
Click on the dropdown box to find and edit an existing management fee code.
Add New Fee
Click on the Add a New Record button
Descriptions
If you have a number of different Management Fee types, enter a meaningful description, such as Management @7% or Fixed @ $600.00
Type
Choose either Percent or Fixed.
Note: Your selection will determine the choices that follow.
Percent
>Fee Percentage
Enter the Fee Percentage. (eg; .0475 or 4.75%.)
Cash Based
When you select a Percent Type calculation, the system needs to know a percentage of what?
If Cash Based is not selected, you will be prompted for a Fee Range. Enter the range of accounts on which the percentage is to be calculated. In this example, the 7% Management Fee will be calculated on whatever shows in the G/L account numbers 3000 to 3999.
If you are using Accrual Accounting, it will be 7% of the Income Charged. If you are using Cash Accounting, it will be 7% of the Revenue received.
If Cash Based is selected, the Fee Range section of the screen disappears. This Management Fee is calculated at the percentage specified on the cash received, namely Tenant Receipts and the Miscellaneous Receipts flagged as subject to Management Fees. Security deposits will be excluded from the calculation.
Cash Based is useful if you are using accrual accounting, but your management fees are payable only when the tenants pay.
Tip: If you are using cash accounting, it’s better not to specify Cash Based, as revenue is only shown in the G/L when it is received. Using the Fee Range feature gives cash accounting clients more flexibility to include/exclude amounts for calculations.
Minimum
You have the option of specifying a minimum management fee.
Create Payable and Supplier
Management Fee payable to the management company will only be generated by the system if the Create Payable field is flagged and a supplier name selected.
Expense Account
Enter the G/L account number to which management fees should be charged to each building. If you’re using our supplied chart of accounts, this would be account 5040.
Tax Calculation:
Select the level at which sales tax will be calculated and the liability account for any Input Tax Credit. If the building on which you are running the Management Fee report is commercial, the sales tax portion will be charged to the account number you have specified as the ITC Account. If it is a residential building, and not eligible for the Input Tax Credit, the sales tax portion will be added to the Management Fee expense.
The system will calculate sales tax on the Management Fee if:
* You have entered a vendor, whose address shows the state or country,
* You have set up the Sales Tax Accounting Code and the Sales Tax % on the state or country information. (See Cities, States, Countries, etc. – Country or State/Province), and
* You have entered a vendor on the Management Fee code, and have ticked the country or state tax.
Fee Range
If you did not select Cash Based, the system needs to know on what revenue accounts to calculate the specified percentage. Fill in any number of G/L account ranges that your percentage is based upon.
Note: If you are using 3-digit GL account numbers, you must enter a preceding zero to make the account number a 4-digit number. E.g. Enter GL account number 400 as 0400.
Fixed Amount
Fixed Fee
Enter the monthly amount of the management fee.
Create Payable and Supplier
Management Fee payable to the management company will only be generated by the system if the Create Payable field is flagged and a supplier name selected.
Expense Account
Enter the G/L account number to which management fees should be charged to each building. If you’re using our supplied chart of accounts, this would be account 5040.
Tax Calculation:
Select the level at which sales tax will be calculated and the liability account for any Input Tax Credit. If the building on which you are running the Management Fee report is commercial, the sales tax portion will be charged to the account number you have specified as the ITC Account. If it is a residential building, and not eligible for the Input Tax Credit, the sales tax portion will be added to the Management Fee expense.
The system will calculate sales tax on the Management Fee if:
* You have entered a vendor, whose address shows the state or country,
* You have set up the Sales Tax Accounting Code and the Sales Tax % on the state or country information. (See Cities, States, Countries, etc. – Country or State/Province), and
* You have entered a vendor on the Management Fee code, and have ticked the country or state tax.
What about a Residential Building that charges sales tax on Non-Tenant Parking
The above sales tax structure works fine as long as the residential building is not flagged as being subject to the country tax. However, if you have a residential building that charges sales tax on non-tenant parking, for example, the system will charge the sales tax on the management fee calculation to the Input Tax Credit account, instead of adding it to the amount posted to the management fee G/L account number. If you want the sales tax on the management fee to be treated the same as any other residential building, there is a way to get around this.
To set the building up so as to have sales tax charged on Parking, but the sales tax on the Management Fee to be included in the Management Fee account, use the Other Jurisdiction Tax level:
* Go to System Tasks – Cities, Provinces/States, Countries, etc. – Other Jurisdiction
* Go to Buildings – Accounting and flag the Other Tax level, but not the Country tax level.
* Go to System Tasks – Control Codes – Accounting Codes – modify the Parking code to show the Other Tax Calculation Level as shown below. (The country flag is fine because the building isn’t set to charge tax, but other buildings may be.)
*The Management Fee - Tax Calculation should show Country tax flagged and whatever the ITC Account is, so that this management fee can be used for commercial buildings.
That’s it. Everything else functions as normal. Sales tax will be charged on Parking and the sales tax on the management fee will be included in the Management Fee expense.