Opening balances and security deposits: what to carry over when you switch landlord software

What is the cutover date?

The cutover date is the day the new system takes over. Choose the last day of a month. Everything before it stays in the old books; everything from the next day forward is posted in the new ones. Your balances are "as of" that date.

How do you set a tenant's opening balance?

1. Take the tenant's ledger through the cutover date.
2. Total charges and payments to get the balance: positive if the tenant owes, negative if they have prepaid.
3. Enter that one number as the opening balance, dated the cutover date.
4. Do not re-enter old rent charges; that double counts.

Example a made-up tenant owes $300 of June rent on June 30 and has prepaid nothing. The opening balance is $300 owed. Another tenant prepaid $100 toward July. That opening balance is $100 prepaid. The total of opening balances across the portfolio is $300 owed less $100 prepaid, which is $200 net owed.

How should deposits be carried over?

List each lease with the deposit you hold. The IRS says in Publication 527 that a security deposit you plan to return is not income when you receive it, which is why it belongs in a separate line as money held, not in rent.

• Record each deposit as held for that tenant.
• Note the account the money is sitting in, because some states require a separate account or interest; check your state's rule.
• Keep any deduction history for current tenants, since a future move-out statement may need it.

Example a made-up 6 unit building has deposits of $1,200 each, so 6 x $1,200 = $7,200 held. Your bank account for deposits must be able to cover $7,200. If it holds $6,000, find the missing $1,200 before cutover.

How do you check it all ties to the bank?

Add opening balances and deposits to your cash position and compare them with your bank statement on the cutover date.

Differences are normally outstanding checks, deposits in transit, or one wrong row in a ledger. Find them one at a time.

What goes wrong most often?

The usual errors are entering old charges on top of an opening balance, so tenants appear to owe twice, and entering a deposit as rent, so income looks higher than it is. Both come from rushing the cutover. Do the arithmetic for three tenants by hand first; if those three tie out, the rest usually will.

Also check the sign of every number. A prepaid balance is a credit, and some tools show credits as negative amounts while others show them as positive. Look at one tenant in the preview before you confirm the whole file.

How DoorKeeping handles it

You enter opening balances and deposits once, dated your cutover date, then confirm the totals against your bank. Each property keeps its own deposits held, so the check runs property by property.

DoorKeeping costs $2 per unit per month with every feature included, no setup cost and no minimum. You import a rent roll from a CSV or XLSX file, and each property gets its own books. Tenants pay your own bank directly, and anything involving money waits for your one-tap approval.

Sources

1. IRS, Publication 527, Residential Rental Property, read Oct 30, 2026
2. IRS, How long should I keep records?, read Oct 30, 2026

Questions

Are security deposits income?

Not when you receive them if you plan to return them. The IRS discusses this in Publication 527.

Do I enter old charges again?

No. Enter one opening balance per tenant as of the cutover date.

What if the totals do not match the bank?

Look for outstanding checks, deposits in transit and a wrong ledger row before you proceed.