When focused on rent, getting paid is crucial. Non-payment is simply a headache waiting to start.
As the landlord, you must ensure that the rental payment process is efficient and smooth. The payment method should work well for the tenant because you want things to be done easily.
Rent receipts serve a purpose because they maintain a paper trail acknowledging when your tenant makes the rent payment.
It's often challenging to determine what should go on a rent receipt.
There are many pieces of the puzzle, and creating a rental receipt is one of the most important steps to take. Let's learn more.
The rent receipt is documentation acknowledging a payment for rent. It can be proof that your tenant paid rent in full or for your income tax return.
Likewise, rent receipts are helpful for accurately documenting partial payments and late payments when they might occur. Both you and the tenant can use them for record-keeping on rental payments throughout the term.
Your rent receipt is more than proof of payment. In fact, it helps you prevent disputes about whether your tenant paid in full or not.
When you include relevant information on your rental receipt, you ensure there's no confusion about when and what was paid. Plus, you can make sure the tenant keeps up with all the terms listed in your rental agreement and have evidence if you must take action against them.
Rent receipts play a crucial role for lease agreement compliance and accounting purposes, so they should be kept in a safe place. If tenants can make electronic payments, you require a digital paper trail. Landlords who accept a money order, cash, or check may want to consider record-keeping software or receipt books to keep things on track.
Sometimes, a tenant wants proof of payment because local and state laws might offer a tax deduction. They can deduct their rent payments from taxes, so they will generally ask you for their monthly rent receipt, even when you don't normally provide one.
When you allow the tenant to get the tax credit on their income taxes, you can build a strong landlord-tenant relationship. You may not be legally required to provide rent receipts, but it's a courtesy that gives you advantages, as well.
There is no universal law where tenants require rent receipts, and you may not be obligated to do so. However, it's recommended for all landlords since it might be the only proof of payment.
Some states require rent receipts to be provided by the landlord, especially when the tenant pays in cash. Cash payments are difficult to verify and track without a rent receipt, which might pose a problem for both parties.
If the tenant claims they paid their rent on time each month, but you know they didn't, you can charge late fees. However, you require evidence to back up that claim. With rent receipts that have a date paid included, that's all you need.
A rent receipt can also be helpful if the tenant hasn't paid and you are working to evict them (either through the court system alone or with an attorney). If you have an established receipt system in place, you can show the gaps during the rental period of when your tenant didn't pay and prove your case.
It's best to use a rent receipt form when issuing rent receipts so that you provide the same information each month. Online payment portals might automatically generate them for you, but you can use a template for your rental receipts, as well.
There are many things you can include, but here is the basic rent receipt format to consider:
To make it easier to track, you might want to have a receipt ID system in place, similar to what you'd see on any invoice. Use the first two letters of your tenant's last name, along with the year and month. This helps to keep your receipts straight for each rental period.
For example, the tenant's name is Jane Doe, and they are paying rent for January 2022, so your receipt number would look like this: DOJAN22.
Using a rent receipt template is beneficial because it often has a space where you can make notes about the late fees included, the remaining balance, and any convenience fees you charge.
Landlords who send the rent receipt by email should include appropriate information in the body. However, a formatted attachment should be included that holds the actual receipt. That ensures there is no confusion about when you got the payment and how much it was. Likewise, your tenant also gets a printable rent receipt they can keep for their records.
It's wise to use a rent receipt template because you will never forget important data and have more consistency with your records.
Though you can make your own rent receipt template, it's often easier to use a company like DoorLoop to help you generate things effortlessly.
Those who send receipts through snail mail will want to keep a copy for themselves for their records. Make sure it is put in the mailbox in a timely manner so that the tenant can also keep track of things and know you got the payment.
Regardless of how the tenants pay rent, it's always wise to issue rent receipts. They might look different based on the payment type, but you can often add a line to a free rent receipt template to make it work for you.
In most cases, cash is the least common rent payment method because people just don't carry it much. Cash is the emergency option, and most people have about $100 on them for the vendors who don't accept cards.
If you do accept cash payments, rent receipts are crucial for you. Cash doesn't have a paper trail, so the receipt is the only way to prove payment or non-payment.
Checks are often easier because the tenant can write it out at home, drop it in the mail, and send it when the rent becomes due. The money is available and doesn't interrupt your cash flow. Plus, most banking apps allow you to direct-deposit the money from your phone.
Though checks offer a paper trail through the deposit receipt, tenants require payment proof. Make sure your rent receipts are generated the day the check was written. You can create a hassle-free rent receipt template to provide tenants, which ensures things run smoothly.
Money orders are like checks, though the tenant doesn't write them personally. They go to a convenience store, bank, or post office to get the money order and are charged a fee for doing so.
Generally, a money order doesn't get issued unless the actual cash for it gets exchanged. Therefore, you have peace of mind knowing your funds are available when you deposit.
There's tons of proof during a money order exchange, but rent receipts prove that you received it after the tenant finished paying rent.
Digital payments aren't always in the form of a digital rent collection service. There are many options that won't go through other vendors, such as:
Landlords can set up a direct deposit through the ACH transfer, ensuring that rent comes from the tenant's bank account every month and into theirs.
It can seem daunting to collect rent online because of the nuances involved. However, they can be useful when focused on rent receipts. The digital paper trail is immediately and automatically created, so it serves as evidence the transaction was made before you send the receipt.
Owning a rental property is all about getting paid. You're the landlord and must ensure transactions are done efficiently with no room for issues. Therefore, rental receipts are the way to go to track the rent payment.
If you're looking for a free rent receipt template, DoorLoop can assist. It has many rental receipts available and other documents you might need.
