Accounting software for property management has to do one thing ordinary small-business accounting does not: hold money that is not yours. Deposits, rent collected on an owner's behalf and reserve funds are all somebody else's money passing through, and a general ledger that treats every balance as the business's own will misstate the position. This page is that difference and what follows from it.
Money held for others is the whole problem
A deposit is a liability, not income. Rent collected for an owner is theirs from the moment it arrives, less your fee. Reserve contributions in an association are restricted. Ordinary accounting software can represent all of this with enough discipline, and the discipline is what fails at eleven at night in month seven. Software that models it natively removes the discipline requirement, which is what you are paying for.
Reporting has to be per property, not just per business
You will be asked what this property earned and cost, by an owner, an accountant or yourself deciding whether to keep it. A chart of accounts that tracks category but not property answers the business question and never the property question, and reconstructing it later from invoice descriptions is a weekend nobody enjoys. Property as a dimension on every transaction is the requirement.
The deposit deserves its own treatment
Held separately where the state requires it, visible as a liability, and applied or returned with an audit trail at the end of the tenancy. Blending deposits into operating cash makes the bank balance look healthy and the position wrong, and it is the mistake that turns a statutory return deadline into a cash-flow problem. Keep it separate in the books whether or not your state makes you.
Two products or one
The integrated version avoids reconciliation and usually has shallower accounting. The split version gives you real accounting and a property system that feeds it, at the cost of an export nobody tests until it breaks. For a small portfolio the integrated route is generally right; the moment an accountant is involved weekly, ask them which they would rather receive.
Questions people ask about accounting software for property management
Is generic accounting software enough?
With a disciplined chart of accounts and a separate deposit account, for a small portfolio, often yes. What it will not do is stop you making the mistakes discipline is protecting against.
Does Lettza do the accounting?
No. It keeps the record of the let: properties, leases, what was charged and what arrived, arrears, work orders and documents. The accounting belongs in accounting software, fed from those rows.
What about tax reporting?
Rental income and expenses are reported on your return, and the recordkeeping expectations are set out by the IRS. A per-property record is what makes that return quick rather than archaeological.