Most landlords start with a spreadsheet. It works fine for one or two properties. Then it doesn't.
The problem isn't the spreadsheet itself—it's the accounting method. Single-entry tracking (just listing income and expenses) breaks down when you need accuracy at scale.
Why Double-Entry Matters
Double-entry accounting requires every transaction to have two sides: a debit and a credit. This isn't bureaucracy—it's a self-checking system.
When debits must equal credits, errors surface immediately. You can't accidentally record income without knowing where the cash came from. You can't pay a vendor without reducing your bank balance.
Trust Accounts: The Most Common Liability
Security deposits must be held in separate trust accounts in most states. Commingling deposits with operating funds is illegal and exposes you to personal liability.
With double-entry accounting, security deposits are recorded as both: - An asset (cash in trust account 1010) - A liability (security deposit held, account 2100)
Your balance sheet always shows exactly how much you're holding for tenants.
When You'll Need Real Books
Spreadsheets fail when:
- **Tax time.** Schedule E requires accurate categorization. Guessing gets expensive.
- **Refinancing.** Lenders want P&L statements and balance sheets. "I have a spreadsheet" doesn't cut it.
- **Audits.** Whether from a buyer, lender, or the IRS—you need an audit trail.
- **Scale.** Managing 10+ units with a spreadsheet becomes a part-time job.
The ScoutzOS Accounting Engine
ScoutzOS includes a full double-entry accounting system built for property finance. Every rent payment, expense, and owner disbursement creates proper journal entries. Reports generate automatically. Trust accounts stay separated.
Your books will survive any audit.