How to Set Up Your Chart of Accounts in AppFolio
The property and trust-side chart: what each account type is for, which ones carry the compliance weight, and the setup mistakes that cost the most to unwind.
Your chart of accounts is the list of every general ledger account your AppFolio database can post to: every category of money coming in, going out, owed, or held. Every rent receipt, vendor bill, management fee, and owner draw lands in one of them. That makes the chart the thing that decides what your financial reports can tell you, and what they can hide. A property management chart has one job a normal business chart does not. It has to keep money you hold for other people visibly separate from money that belongs to your company.
Most of the books we clean up did not go wrong in the daily entry. They went wrong on day one, in how the chart of accounts was set up. This guide covers how GL accounts in AppFolio are organized, which accounts carry the compliance weight, and the setup mistakes we see most often.
This guide covers the property and trust-side chart of accounts, the one your AppFolio database posts to: owner ledgers, tenant ledgers, and trust bank accounts. Your management company's own books (payroll, marketing, office rent, company profit) belong on a separate corporate chart of accounts, kept in QuickBooks Online. Trust side in AppFolio, corporate side in QuickBooks Online: that split is how we run books for our own clients. It keeps company overhead physically out of the trust database, so commingling cannot happen on paper. We cover the company side in our corporate bookkeeping service.
Where the chart of accounts lives in AppFolio
You will find it under Accounting → GL Accounts (/accounting/gl_accounts). From that page you can view every account by type, add custom accounts, and manage cash offset accounts. Two related settings matter:
- GL account permissions. These are set on each individual GL account's page, where every AppFolio role gets either Full Permission or No Permission for that account. Used well, this keeps a leasing agent from posting to an owner-funds liability account by accident. There is also a consolidated GL Account Permissions page under Settings.
- Property-level accounting defaults. Each property's Accounting tab holds management fee settings, late fee policies, and GL defaults for that property. Availability varies. It is not present in every database and may not be enabled by default, so confirm it exists in yours before you build a process around it.
Account types and AppFolio's numbering
AppFolio organizes the chart by account type. Most databases follow a numbering convention that gives each type its own range:
| Type | Typical range | What lives here |
|---|---|---|
| Asset (incl. Cash) | 1xxx | Bank accounts (trust/escrow and operating), accounts receivable, and property assets. AppFolio treats cash accounts as their own flavor of asset and tags them as operating or escrow. |
| Liability | 2xxx | Security deposits held, prepaid rent, accounts payable, clearing accounts, owner funds owed. |
| Capital (Equity) | 3xxx | Property owner contributions and distributions, retained earnings. These are the property's owners, not your company's shareholders. |
| Income | 4xxx–5xxx | Rent and rent-related income in 4xxx; reimbursements and other income in 5xxx. |
| Expense | 6xxx–7xxx | Repairs, utilities, insurance, taxes, and the management fee charged to the owner. |
| Other Expense | 8xxx–9xxx | Remodels, replacements, and other items likely to be capitalized at tax time. |
These ranges are a convention, not a rule AppFolio enforces. What AppFolio enforces is the type. Real databases vary a lot. In charts that were migrated or hand-built, we regularly find income accounts sitting in the 3xxx or 7xxx range, and capital items in 7xxx rather than 8xxx. Open your own Chart of Accounts report first, see which convention your database already uses, then keep using that one consistently. Changing the convention mid-stream is worse than inheriting an odd one.
Keep the numbering ranges intact when you add accounts. A custom expense account numbered into the income range will technically work, but every report that groups by account number will mislead whoever reads it, and the next bookkeeper will inherit the confusion.
If you want an industry-standard reference point, NARPM publishes two different things and it matters which one you reach for. The NARPM Accounting Standards chart of accounts is built for the management company's corporate books, which is your QuickBooks Online side, not your AppFolio database. The separate NARPM Trust Accounting Chart of Accounts is the one aimed at the trust and property side covered in this guide. NARPM's ranges are not AppFolio's (NARPM uses 5000–5899 for cost of services and 6000–6899 for expenses, for example), so treat them as a vocabulary to map to rather than a scheme to copy in. You do not have to adopt either wholesale, but they are the closest thing this industry has to a common language, and mapping your chart to them makes benchmarking against other property management companies possible. Both are linked in Sources.
The accounts that do the compliance work
A property management chart of accounts turns on a small set of accounts that keep trust money identifiable:
- Security deposit liability. Every deposit you hold is money you owe someone, not revenue. It belongs in a liability account, and what that account says you hold has to agree with what you actually hold. When it does not, AppFolio's Financial Diagnostics page flags it: as a Security Deposit Funds Mismatch when the deposits tracked against tenants and leases disagree with the liability, and as an Escrow Cash Account Balance Mismatch when the escrow cash account balance disagrees with what the books say should be sitting in escrow. Watching this daily is a large part of what a trust bookkeeping service does.
- Prepaid rent and tenant prepayments. Rent received before it is due is also a liability until the charge date. Post it straight to rent income and your owner statements overstate what the owner earned this month.
- Owner funds. What you hold on behalf of each owner has to tie out property by property, not just in total.
- Clearing accounts. Accounts like Security Deposit Clearing should pass money through and return to zero. A clearing account that holds a balance for weeks is a red flag an auditor will chase, and another item AppFolio's diagnostics check for.
Treat any account whose balance should equal a real-world number (a bank balance, deposits held, owner funds owed) as a control account. Never post manual adjustments to one to make a report look right. Every shortcut posted to a control account becomes an unexplained variance at audit time.
Setting up income and fee accounts
AppFolio sorts fees in a way that catches people out, so be precise about which fees are income accounts in the database and which are not.
- Rent and owner income (4xxx). Rent, subsidized rent, association income and the like belong to the owner's ledger. Your cut arrives through the management fee, not by recategorizing rent.
- Reimbursements and other income (5xxx). Utility reimbursements, laundry income, and similar recoveries. Some databases keep these in the upper 4xxx instead. Either is fine as long as it is consistent.
- Additional fees are the income accounts that get swept to you. Late, NSF, application, pet, and lease termination fees accumulate in income accounts inside AppFolio. Where your management agreement gives the fee to the management company rather than the owner, these are the accounts that are paid over to your company.
- Management, leasing and renewal fees are expense accounts in AppFolio, not income accounts. From the property's point of view the management fee is an expense paid to you, so in the AppFolio database it sits in the expense range, commonly a 61xx "Management Fees" account. It becomes income only on the other side of the bridge, in QuickBooks Online on your corporate books. Same dollar, two account types, two systems. Getting this backwards is one of the most common structural errors we find.
- Deposits and prepayments are not income at all. The single most common miscoding we find is money received from a tenant posted as income regardless of what it actually was. We wrote up why that instinct is wrong in "All money received from a tenant is income? Not quite."
Resist creating an income account per marketing whim ("Pet rent, 2nd floor units"). Add an income account only when someone will make a decision based on seeing that line separately.
Setting up expense accounts
Two audiences read your expense accounts: owners deciding whether you are managing their property well, and their tax preparers at year end. Serve the second audience by aligning expense categories with the lines owners actually report on IRS Schedule E (Form 1040), Part I, lines 5 through 19:
| Line | Schedule E category |
|---|---|
| 5 | Advertising |
| 6 | Auto and travel |
| 7 | Cleaning and maintenance |
| 8 | Commissions |
| 9 | Insurance |
| 10 | Legal and other professional fees |
| 11 | Management fees |
| 12 | Mortgage interest paid to banks, etc. |
| 13 | Other interest |
| 14 | Repairs |
| 15 | Supplies |
| 16 | Taxes |
| 17 | Utilities |
| 18 | Depreciation expense or depletion |
| 19 | Other |
When your categories map cleanly to these lines, January gets much easier for everyone. A well-built AppFolio expense range often mirrors this order outright: 6050 Advertising, 6070 Cleaning and Maintenance, 6090 Insurance, 6100 Legal and Other Professional Fees, 6110 Management Fees, and so on.
Split repairs from capital improvements. They are different lines on the owner's taxes, expensed now versus depreciated over years, and unwinding a year of mixed postings is expensive cleanup work.
Customizing the chart without breaking it
AppFolio lets you add custom GL accounts. Before you add one, check whether an existing account already covers it. Near-duplicate accounts ("Repairs", "Repair", "R&M") are the most common self-inflicted wound we see: they split the same activity across lines, understate every category, and make month-over-month comparison meaningless.
Three naming rules that hold up. Name accounts for what the money is, not who touched it ("Landscaping", not "Jim's Lawn Service"). Keep names short enough to survive report columns. Never encode a property name into a GL account, because AppFolio already dimensions every transaction by property. One chart, used consistently across the whole portfolio, is what makes properties comparable.
How to tell your chart of accounts is hurting you
You rarely see a bad chart directly. You see its symptoms:
- Owner statements that need a verbal explanation to make sense
- A profit and loss where "Miscellaneous" is a top-five expense
- The Financial Diagnostics page (Accounting → Diagnostics) showing recurring security deposit mismatches, escrow cash mismatches, or non-zero clearing balances
- Bank reconciliations that tie out in total but not per property
We walked through what each diagnostic means in AppFolio's 9 financial diagnostics explained. If several of them are chronic, the fix is usually structural rather than transactional, which is the situation our financial diagnostic cleanup exists for.
Maintaining it
Review the chart once or twice a year rather than continuously. Three things to do each time:
- Merge duplicates. Consolidate the "Repairs / Repair / R&M" families before they multiply.
- Clear out what is not being used. An account that has never had a transaction posted to it can be deleted outright. Once an account has any history, AppFolio will not let you delete it. You can only hide it, which keeps the history intact and takes the account out of the picker. Plan for that: hiding, not deleting, is what you will be doing on any account that has been live.
- Test every new account request. Ask whether someone will decide something from this line. If not, it does not need its own account.
Make one person the owner of chart changes so it stops accumulating by committee.
If you would rather have specialists own all of this inside your own database, that is what our AppFolio bookkeeping team does, chart of accounts included.
Run Buildium instead? The same thinking applies, and we wrote the Buildium version of this guide too.
Sources
- NARPM Accounting Standards (chart of accounts for the management company's corporate books): narpm.org
- NARPM Accounting Standards, Chart of Accounts & Conversion Guide (PDF): narpm.org
- NARPM Trust Accounting Chart of Accounts (the trust-side standard): narpm.org
- IRS, About Schedule E (Form 1040), Supplemental Income and Loss: irs.gov
- IRS, Schedule E (Form 1040) form PDF, Part I expense lines 5–19: irs.gov
- AppFolio, Property Management Accounting Software (product overview): appfolio.com
AppFolio's Help Center articles on GL accounts are customer-login-gated, so they are not cited as public sources. The AppFolio behavior described above reflects APM Help's hands-on work in live client databases.
Frequently asked questions
What is the chart of accounts in AppFolio?
It is the complete list of general ledger accounts your AppFolio database posts to, organized by type: asset (including cash), liability, capital, income, expense, and other expense. It lives under Accounting > GL Accounts and determines how every transaction is categorized on your financial reports.
Can I customize the AppFolio chart of accounts?
Yes. AppFolio supports adding custom GL accounts, and permissions on each account let you control which roles can post to it. Add accounts only when a report reader needs that line separated, and keep your database's existing numbering convention intact.
Is the management fee income or an expense in AppFolio?
In AppFolio it is an expense, an expense of the property paid to you. It becomes income on your management company's books in QuickBooks Online. The fees that do sit in income accounts inside AppFolio are the additional fees: late, NSF, application, pet and similar, which are swept to the management company where the management agreement assigns them to you.
How is a property management chart of accounts different from a regular one?
A property management chart has to separate client money from company money. That means liability accounts for security deposits, prepaid rent, and owner funds that a normal small-business chart never needs, and those balances must tie to your trust bank account, which is what a three-way reconciliation checks.
Should trust and corporate books share a chart of accounts?
No. The property and trust chart handles client money and owner reporting inside AppFolio. Your management company's own books, meaning payroll, marketing, office rent and profit, belong on a separate corporate chart of accounts in QuickBooks Online, connected to the trust side only by the fees swept over. Keeping the two in separate systems is the cleanest structural defense against commingling.
Can I delete a GL account I no longer use?
Only if nothing has ever posted to it. Once an account has transaction history, AppFolio will let you hide it but not delete it, so the history stays auditable.
What are the most common chart of accounts mistakes in AppFolio?
Duplicate near-identical accounts, deposits or prepaid rent posted as income, management fees set up as income accounts inside AppFolio, manual adjustments to control accounts, repairs mixed with capital improvements, and per-property account variations that make the portfolio impossible to compare.