Essential Chart of Accounts for an STR Business

When managing the financials of a Short-Term Rental (STR) business, it’s crucial to have a well-structured Chart of Accounts (COA) that accurately reflects all the financial activities of the business. Here’s a detailed list of the essential accounts that should be included in an STR set of books:

1. Assets

Current Assets

Cash and Cash Equivalents: Includes checking accounts, savings accounts, and petty cash.
Accounts Receivable: Money owed to you by guests or booking platforms.
Prepaid Expenses: Payments made in advance for services, such as insurance, advertising, or supplies.

Fixed Assets

Property and Equipment: The value of the properties, furniture, fixtures, and equipment owned by your business.
Accumulated Depreciation: The total depreciation taken on fixed assets over time.

2. Liabilities

Current Liabilities

Accounts Payable: Money you owe to vendors, such as cleaners, maintenance workers, or suppliers.
Accrued Expenses: Expenses incurred but not yet paid, like utilities or wages.
Security Deposits: Deposits received from guests to cover potential damages.
Short-term Loans: Any short-term loans or lines of credit used for operational purposes.

Long-Term Liabilities

Mortgage Payable: Long-term loan taken to finance the purchase of properties.
Long-term Loans: Any other long-term financing obligations.

3. Equity

Owner’s Equity: The owner’s investment in the business.
Retained Earnings: Cumulative profits retained in the business after dividends are paid out.
Owner’s Draw: Withdrawals made by the owner for personal use.

4. Revenue

Rental Income: Income from guest bookings.
Cleaning Fees: Fees charged to guests for cleaning services.
Additional Services: Income from offering additional services like guided tours, transport, or other amenities.
Cancellation Fees: Fees charged for booking cancellations.

5. Expenses

Cleaning and Maintenance: Costs for cleaning services and property maintenance.
Utilities: Expenses for electricity, water, gas, and internet services.
Property Management Fees: Fees paid to property managers or management companies.
Marketing and Advertising: Costs for promoting your properties, including online listings and advertisements.
Insurance: Expenses for property and liability insurance.
Supplies: Costs for guest supplies, such as toiletries and kitchen items.
Taxes and Licenses: Property taxes, business licenses, and other regulatory fees.
Depreciation Expense: The allocation of the cost of fixed assets over their useful life.
Interest Expense: Interest paid on loans and mortgages.
Professional Fees: Fees for legal, accounting, or other professional services.
Travel and Entertainment: Expenses related to business travel and entertainment for guests or potential clients.
Bank Fees: Charges for banking services and transaction fees.

Conclusion

A well-organized Chart of Accounts is essential for accurately tracking the financial health of your STR business. By categorizing all financial transactions into specific accounts, you can gain better insights into your business’s performance, ensure compliance with accounting standards, and make informed decisions to drive growth and profitability. Ensure that your COA is tailored to your business’s unique needs and regularly reviewed and updated to reflect any changes in your operations.