Bookkeeping, payroll, and CFO services for San Diego's small businesses.

Call or Text: (619) 417-8735

How do I account for short-term rental income?

Short-term rental income needs to be tracked at the gross level, not the net payout you receive from Airbnb or VRBO. This distinction matters because platform fees are a deductible expense, and recording only the net amount means you’re understating both your income and your expenses.

When a guest pays $500 for a two-night stay and Airbnb takes $75 in host fees, you have $500 in gross rental income and $75 in platform fees expense. Your books should reflect both. The same applies to cleaning fees collected from guests. If you charge $150 for cleaning and pay a cleaner $120, you’re recording $150 as additional income and $120 as a cleaning expense.

Separate your income and expenses by property if you own more than one rental. Your accountant needs to see profitability by property, not just in aggregate. Most accounting software lets you track this using classes, locations, or projects. Set this up from the start because going back to separate years of mixed transactions is tedious and expensive.

San Diego has specific requirements for short-term rentals including the Transient Occupancy Tax, which is currently 10.5%. You collect this from guests and remit it to the city. Some platforms collect and remit TOT automatically for California listings, but not all do, and direct bookings definitely require you to handle it yourself. Track what’s been collected and what you owe separately from your rental income. This is a liability on your books until you pay it.

Common expenses to track include cleaning between guests, supplies like toiletries and linens, repairs and maintenance, property management fees if you use a manager, insurance, utilities, HOA fees, mortgage interest, and property taxes. If you’re furnishing or renovating the property, those costs may need to be capitalized and depreciated rather than expensed immediately. A working with a San Diego bookkeeping service familiar with rental properties helps you categorize these correctly from the start.

How the IRS treats your rental income depends on average guest stay length and your level of involvement. If the average stay is seven days or less, you’re typically running a rental business reported on Schedule C, which means self-employment taxes apply. Longer average stays usually mean passive rental income on Schedule E. The tax treatment affects both how you file and which deductions are available to you.

Connecting your booking platforms to your accounting software can automate some of this, but you’ll still need to review the imports and make sure gross income and fees are being recorded correctly. Many platforms export data in ways that require cleanup before it’s useful for bookkeeping.

The goal is clean records that show your true revenue, every deductible expense, and accurate profit by property. This makes tax prep straightforward and gives you real numbers to evaluate whether each rental property is actually worth keeping. Getting the structure right when you start a property saves hours of cleanup work down the road.

San Diego's Small Business Bookkeeper

The Next Step:
A Short Conversation

A quick call to tell us about your business. We'll listen, answer your questions, and give you a clear price quote.

More Questions

How do I track inventory for a restaurant?

Weekly counts of high-value items combined with monthly full counts give you what you need. The goal is calculating your food cost percentage and catching variance before it kills your margins.

Read answer

How do I handle retainage in construction accounting?

Track retainage using separate asset and liability accounts in your chart of accounts. Record the withheld portion separately from regular receivables since the collection timing is different.

Read answer

What is use tax and do I owe it?

Use tax is the sales tax you owe when a seller doesn't collect it from you. Most businesses owe it on out-of-state and online purchases where no California sales tax was charged. The rate matches your local sales tax rate.

Read answer

How do I reconcile old bank statements?

Start with the oldest unreconciled month and work forward chronologically. Match each transaction on your bank statement to your accounting records, adding missing entries and investigating discrepancies as you go.

Read answer

What is the best invoicing system for consultants?

The best invoicing system connects to your accounting software and fits how you actually bill clients. Look for time tracking integration, recurring billing for retainers, and easy payment processing.

Read answer

What is reserve fund accounting for HOAs?

Reserve fund accounting tracks money set aside for major HOA repairs and replacements. It's separate from operating funds and requires specific reporting under California law.

Read answer

Fresh Ledger provides full-service bookkeeping for San Diego County's small businesses. We handle monthly financials, payroll setup, and part-time CFO services for local business owners who want their numbers done right.

Client Reviews

5-Star Rated Firm
  • Intuit ProAdvisor Platinum Tier badge
  • QuickBooks Online Certification Level 1 badge
  • QuickBooks Online Payroll Certification badge

© 2026 Fresh Ledger LLC