📁 Return to ⚙️ Administration Category
Article Table of Contents
- ➖ Operating Expense Overview
- 📁 Types of Expense Items
- Record a One-Time Bill [yet to be paid]
- Record a Recurring Bill or Transaction
- Record a Bill Payment [to pay a bill entered previously]
- Record a Check or Other Payment [not related to a previously-entered bill]
➖ Operating Expense Overview
Learn about the costs and expenses that support your recovery home(s)
The basics regarding operating expenses
Operating expenses refer to the costs required for the day-to-day operation of your recovery home. These expenses are essential to keep the facility running smoothly and are generally incurred from third-party vendors. Managing these expenses accurately ensures the financial health of your business and supports effective budgeting.
Operating expenses typically include utility costs, maintenance, lease payments, and supplies necessary for the recovery home. Most of these will be regular, recurring expenses, though some may be one-time costs. Tracking and recording these expenses helps maintain financial transparency and is crucial for tax reporting and financial planning.
Key Points:
- Operating Expenses: Daily costs for running the recovery home, often from third-party vendors.
- Expense Tracking: Accurate record-keeping is important for financial health and compliance.
- Categories: Includes utilities, maintenance, supplies, and other essential services.
Understanding and managing these operating expenses will help you ensure your recovery home's financial sustainability while providing necessary services to guests.
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📁 Types of Expense Items
Learn about the types of expense items you'll encounter running your recovery home
Operating Expenses
Operating expenses are standard expenses for the day-to-day operation of your recovery home. These will almost always be charged from third parties.
- Lease Expense (Account 501): Payments for leasing your home or related costs and expenses.
- Heating Fuel Expense [gas or oil] (Account 502): Heating costs for gas, oil, propane, or other.
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Electricity Service Expense (Account 503): Electricity service (bills).
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Water & Sewer Expense (Account 504): Costs to provide water and sewer to a recovery home.
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Drug Screen Supplies Expense (Account 505): Cost to purchase drug screens and screening supplies.
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Repairs, Maintenance, Cleaning (Account 506): Repairs, maintenance, and cleaning expenses.
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House Supplies & Bedding (Account 507): House supplies and bedding expenses.
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Telecom: Internet, TV, Phone (Account 508): Expenses incurred for phone, TV, and internet (wifi) telecom utility services.
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Trash Disposal Expense (Account 509): Expenses for disposal of trash/rubbish.
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Marketing & Advertising (Account 510): Marketing and advertising costs, including Sober House Directory listing.
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Insurance Expense (Account 511): Insurance expenses, including general and professional liability.
- Contractor Expense (Account 514): Contractor payments and related expenses, including VSL Contract Operators for Unity Recovery Housing homes.
- Certification Expense (Account 522): Use this account for certification fees and costs.
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Home Furnishing Cost (Account 551): Purchases of furniture, appliances, or other similar items.
- Guest Refund & Deposit Return (Account 530): Expense item for the issuance of resident refunds or returning a resident's deposit.
Vanderburgh Sober Living expenses
These expenses are also operating expenses but will be charged from Vanderburgh Sober Living.
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Vanderburgh Sober Living Service Fees (Account 515): All payments to VSL for services.
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ePay Backcharge Expense (Account 516): Expense for electronic payment acceptance, typically backcharged from VSL for accepting ePay from guests.
Other expenses
These other expenses are incurred separate from the operation of any particular home. They are still typically tax deductible but the difference is they relate to the operation of your business instead of a specific recovery home.
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Software & Subscriptions (Account 512): Software expenses, including subscriptions and software that is used to operate your home.
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Professional Fees & Services (Account 513): Professional fees to accountants, lawyers, or other professional services rendered.
- Bank Fees (Account 517): Fees and payments to banks, not related to interest expense (e.g., account maintenance fees, NSF costs, etc.).
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Business Auto & Travel (Account 518): Auto-related or travel-related costs and expenses relating to the operation of a recovery home.
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Business Meals & Entertainment (Account 519): Costs for food or entertainment relating to the operation of a recovery home.
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Interest Expense (Account 520): Interest paid on debt relating to the business, including to banks, credit cards, or others.
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Office Expense (Account 521): Costs relating to leasing or operating an office in support of your recovery homes.
- Entity & Filing Fees (Account 523): Filing fees relating to your business entity or other government-related filings and costs.
- Construction & Improvements (Account 550): For all construction and improvements (rarely used; usually use "Repair").
- W-2 Payroll Expense (Account 560): Costs to pay staff on a W-2 basis; not contractors or professional services.
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Charitable Contributions (Account 590): Donations to nonprofits or charities, regardless of tax deductibility (confirm with a tax advisor).
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Income Tax Expense (Account 597): Expense line item for income tax payments.
Special Cases and Additional Expenses
This category covers unique financial scenarios and additional expenses that don't fall under regular operating costs, including resident refunds, operator reimbursements, and other non-standard expenditures.
- Guest Refunds / Deposit Return (530): Adhere to the Resident Refund Policy and record payments accordingly. When handling guest refunds and deposit returns in Buildium, treat these transactions as check payments. This involves issuing a refund directly from the tenant's lease ledger, where you can specify the refund amount, the bank account from which it should be issued, and the payee's details. This process ensures a straightforward method of returning funds to tenants or guests.
- Operator Reimbursement: For personal payments made for business expenses, record a payment in Buildium. For operator reimbursements, the approach is similar to issuing a refund. If an operator has incurred expenses on behalf of the business and needs to be reimbursed, this transaction is also processed as a check payment through Buildium. This allows for a consistent method of handling outflows related to business operations, ensuring that all transactions are accurately recorded and reconciled.
- Other Operating Expenses: Includes bank fees, office expense, interest expense, and meals & entertainment, each requiring specific recording actions.
- Non-Operating Expenses: Covers costs unrelated to business operations, like owner draws and major updates.
Owner Financial Activities
Owner financial activities include transactions that directly affect the owner's equity in the business, such as owner draws and contributions, highlighting the personal financial interactions with the business's operating account.
Owner Draws (101)
Finally, we will briefly discuss owner draws. Owner draws take place when a Chartered Operator draws funds as a distribution from their business bank account. After paying all the businesses and home's expenses, Operators are free to distribute the remaining funds as a taxable owner's draw, covered in more detail in 📋 Owner Draw Policy. Like the others, this topic will be covered in more detail in later accounting training modules.
Questions to consider:
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How often to take owner draws
Owner Contributions (102)
Owner Contributions is literally what it says. The owner makes a direct (financial) contribution to the business. For example, an owner takes $2,000 from their personal checking account and deposits it into the business account. This is in contrast to depositing $2,000 received from the business's operations, in our case providing housing to residents.
It is important to denote between these contributions and revenue from the business itself as this will affect your taxes. It is important to know that any activity that is considered an Owner Contribution cannot be on your income statement.
🧮 Using the Bills Feature in Buildium
Learn about Buildium's feature to help track your future payables
Buildium's bill feature is a helpful tool for tracking expenses to be paid in the future. When invoices and bills are received and will be paid at a later date, they must be recorded in Buildium using the bills feature. This will allow you to add all bills when they arrive, set due dates, and track what needs to be paid when. The bills feature is used to track anything you plan on paying in the future. If you are making a payment immediately, skip to the next section.
Access the Bills Menu
Open up Buildium and navigate to Accounting > Bills to display the bills menu. On the bills menu, you can see a list of bills, as well as options to sort and filter the list of bills. At the top of the menu, you will see options to record bills, record credits, and pay bills. By selecting one of the bills on the displayed list, you can pay the bill, edit the bill, or delete the bill.
One-time v. recurring bills
In Buildium, bills are categorized into single and recurring types. Single bills, meant for variable or one-time expenses, are used for costs like repair payments or marketing materials, where amounts fluctuate. Recurring bills track consistent monthly expenses such as internet or lease payments, where the payment amount remains unchanged. This distinction helps in organizing bills based on their frequency and variability, ensuring accurate financial tracking and management.
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Record a One-Time Bill
Learn how to record a one-time bill for future payment
To record a one-time bill in Buildium, follow these steps:
- Obtain the bill's PDF by scanning paper bills or downloading electronic ones.
- In Buildium, navigate to Accounting > Bills and select "Record bill."
- Upload the PDF, then enter the bill's details including dates, vendor, and item specifics.
- Choose to save the bill to your menu, view it immediately, or add another for streamlined billing management.
Property or Company
There are two selections for this section:
1. Select the exact property address associated with the expense e.g select 123 Rise St under property or company area to record a gas bill for this property.
2. If the expense is entity related, select one property to carry the expense or divide among all your properties. All property expenses get carried to the Entity level automatically.
* If a bill has expenses for multiple properties under the same entity, add lines and record each property with its respective amount.
Account: The account is the type of expense item, e.g gas, repair, trash, etc.
Description: In this section please leave a short precise description of the expense(s). This is helpful when you have to look back through your expenses for more details or when filing taxes.
Amount: Enter the amount paid or to be paid of the item, double-check to make sure your figures are correct.
Record a Recurring Bill or Transaction
Learn how to record a recurring bill or other transaction
Record a new recurring bill
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On your Buildium dashboard, navigate to Accounting > Recurring Transactions
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On the recurring transactions menu select "Add recurring bill"
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On the Add recurring bill pop-up page:
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Enter Bill Information
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Select Vendor e.g. Eversource
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Enter property address, account number, and type of bill in the memo section e.g.
Lease | Monthly | 24 Chapman or 119 Forest | Gas | 0028372783
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Enter Recurrence information depending on the invoice or statement received
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Set bill frequency, usually monthly
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Set next date, the date the bill is due each month. Start with the current month due date
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Under "Post" section enter 5 days in advance or you can set it to recur 30 days in advance
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Under "Next Due Date" always have it at 0
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Under "Duration" select Until Canceled
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Enter Item details
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Save the recurring transaction
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"Save" will save the bill to your bills menu and it will automatically re-post each month
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"Save & View" will save the bill you entered and immediately open the bill record you just created
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"Save & add another" will save the bill you entered and open a new "Record bill" pop-up page for easy recording of additional bills.
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Editing a recurring bill
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On your Buildium dashboard, navigate to Accounting > Bills
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Locate the bill you are looking to pay or just received an invoice for
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Open the bill and select Edit
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Upload a PDF copy of the current month's invoice (Ensure you have the invoice/statement scanned and saved on your computer under the correct property folder)
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Compare the new figure on the statement with what you have on the bill.
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Change any figures if the amount due is different from last month's amount due
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Record a Bill Payment
Record a payment on a previously-entered bill
Before recording any payment, see if the payment is associated with a bill that was entered earlier for future payment. If you have entered a bill for the item you are paying, then you need to enter a payment against the recorded bill. Simply recording a check, discussed next, will record the payment but leave the unpaid bill in the bills menu.
Record a bill payment
To pay a bill, visit the Bills section of the Accounting menu in Buildium.
Go to “pay bill by check” or “pay bill by EFT” and follow the instructions. Make sure you properly record the check number, correct bank account, etc. Once paid, be sure to visit the Banking section and view the record created in the bank account to ensure the payment was recorded properly.
Select Bill to Pay
Bill record example
Enter Payment
Bill payment example
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Record a Check or Other Payment
Record a check or other payment, unrelated to a previously-entered bill
To record any payment which is not associated with an existing unpaid bill record, such as issuing a refund, reimbursing yourself for expenses, or paying a contractor who has not provided a bill, visit the Banking tab, select the appropriate bank account, select “record check” and identify all requested information about the payment.
Access Banking Menu
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Open Buildium dashboard
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Accounting menu
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Banking
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Select your bank account
Select Bank Account
Select Record Check
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