QUICKBOOKS, Is it the only way?

Question

Hey BP,

Quickbooks, is this the way to go?

I have a REI business and am fairly new to it.  I have only flipped houses thus far but I am very interested in Buy and Hold as well for 2016.  The question I have is what is the best way to keep track of everything on the financial side of the business.  Currently I have a CPA and for the first year he said it was okay to itemize everything on excel.  I have separate folders for each property where I keep all of my receipts, ect.  I plan on growing my business substantially in 2016 and I want to learn the correct way now so I can focus on the REI and know that everything is in order with the books.

Please let me know what you currently use or any advice you would give me.  My husband uses quickbooks for his business and said it is very difficult at first but then becomes second nature.  I will learn whatever is needed but if there is something that would work that does not require the huge learning curve that would be awesome!

Linval T. · Answer

@Jamie Wooley - This is a good question that has been posed quite often with various pros and cons and I am sure there will be more as we get closer to tax time.

However, I found the below blog which sums it up nicely.

https://www.biggerpockets.com/blogs/5070/blog_post...

Actually a few days ago @Nancy Neville outlined a list of attributes in the use of Quickbooks for Landlords that you can review at the link below.

https://www.biggerpockets.com/forums/517/topics/24...

Gino Barbaro · Answer

@Jamie Wooley

Hi Jamie

I use quickbooks for my businesses, including real estate.  Once you set up each entity, it is fairly easy to maintain.  You can hire a bookkeeper to input the work, but I would keep each entity separate, so you can track the progress of each property and calculate values.  You may want to refi or sell a property, and maintaining separate records would facilitate the process.

Once you start growing, you may want to begin forming LLCs for protection, whereby you definitely have to maintain separate bank accounts so as not to commingle funds.  It is more expensive and time consuming but offers a level of protection to your business

Good Luck

Gino

Arlen Chou · Answer

@Jamie Wooley I currently use Quickbooks for accounting because it has so many features, and it is easy to find people who have experience with the software.  I use it for my other businesses, so keeping a single platform makes sense.  However, it is on the expensive side.  You could look at Freshbooks.  It is cloud based and less expensive.  I have never personally used it, but I hear that it is great for small companies and that it is very intuitive, but it is not as robust as QB.  I am sure you can find plenty of online Quickbooks vs. Freshbooks comparisons.

One thing that is particular to your case is that you mentioned that your husband is currently using QB.  It might be nice sharing the single platform so you can help/teach each other.

Good luck,

Arlen

Virginia H. · Answer

If, for whatever reason, a user of Xero.com chooses to use another service, is all of your data downloadable or do you lose it?

Account Closed · Answer

Xero also has a "tracking" feature with its cloud option that works the same as the "class" feature in QB desktop. QB Online didn't offer last time I looked.

Account Closed · Answer

Karin,

Yes, a separate LLC for each property you buy and hold. For me is easy having the LLC named under the address. In that way each one is independent and you protect every investment at the same time you are protecting yourself.

Virginia H. · Answer

Hello all.

I hate that my first real post on BP is going to be so "venomous."  However, let me share my Quickbooks story and explain why I will NEVER use an Intuit product again.

I am the executive director of a non-profit, non-subsidized, affordable housing community.  We have a five member board of directors and are required bylaw to undergo a financial audit every fiscal year.

Every penny  we bring in from rents is crucial to our very survival - for a multitude of reasons.  When I say "affordable" I mean affordable. For example, a 2/2 1100 sq ft home on about .25 acre rents for $431.00 per month.

Here is a link to a summary of the issues I experienced using Quickbooks.  This is a post I made on Intuits site while seeking resolution to the critical problems we were attempting to resolve.

https://community.intuit.com/questions/1201452-not-happy-significant-issues-with-accepting-money-orders-qb-2015-costing-me-thousands-of-dollars

The link above is the summary. Let me tell you how the story ended:

1.  I was on the phone with Intuit customer service for over 2 hours and was sent back and forth between various departments - all of which were apparently located in India.

While on hold, I sought the name of the CEO of Intuit (Brad Smith 650-944-6000) and called his office.  Knowing I would never get through to Mr.Smith I asked to speak with his assistant. Once on the phone with his assistant, I gave her a quick summary of what had transpired and the thousands of dollars it was costing the housing authority in bank fees ($3.00 per sheet - one transaction on a sheet - for one entire fiscal year -with an average of 125 transactions per month = approximately $4,500.00 in bank fees).

She told me she would call me back later that day. We were on the phone about 10 minutes. At the end of the call I informed her that I had been on hold with her company and the phone was on speaker and during all that time no one even picked up to acknowledge my presence. I told her the poor customer service was yet another significant issue.

The next day a different assistant contacted me and acknowledged the Intuit software update and the resulting data corruption was the cause for the problems and costs associated with the issues I was dealing with.

She then went on to inform me that Intuit would refund the $299.99 they charged to have my data corruption repaired (that's a whole other story).  Though they acknowledged it was their error  they would not be reimbursing any of the thousands of dollars the housing authority had to pay  in bank fees incurred after having to order duplicate copies of every deposit item for an entire fiscal year.

She also acknowledged there was no warning or disclaimer on the QB update that money orders were not a viable payment option and as a result all previous and future money order data would be altered or deleted by the program during the software update.

2.  PNC Bank .... I can not praise enough.  Working closely with employees in our local branch, with whom I have worked closely with over the past few years, went above and beyond in their efforts to help defray our costs and minimize our losses.

Not only did they find a way they find a way to consolidate multiple transactions on to one sheet, but they  also capped our costs at $2,000.00.

They also immediately set us up for electronic deposits (fees waived) with a minimum monthly base fee, of course.  This permits me to keep copies of all deposit items in the event something ever happens again.

3.  We are still using Quickbooks - temporarily -ONLY because our auditor has requested we do so until she has completed the financial audits for FY 2014 and 2015.  After some other non-related issues are resolved, and after receiving the auditor "go ahead" I will then be switching to another program.

NEVER EVER EVER EVER EVER ... EVER will I utilize an Intuit product again .... EVER.

Mistakes happen and I understand that.  However, Intuit does not stand by their product, their customer service is horrid, and most of their employees appear to be outsourced to India - and nary a one speaks clear english - and a lack of communication does nothing more than to increase the frustration and eventually persuade one to give up - which I now believe may be the ultimate goal.

And I will not even get into the man hours I personally had to put in (16 hour days for months) to repair and rebuild the financial records cannibalized by their own software.

Sorry for the rant.  I am only one anecdotal story. For every one bad experience like mine I am sure you will find 50 praising it's virtues.

Intuit? I have to give a BIG thumbs down.

Just my $.02

Tami R. · Answer

are you making each property a class on QB?  Along with QB is anyone using a rental software program like AppFolio, buildium and if so what are you using that program for vs QB

Ned Carey · Answer

I used to use Quicken, in fact I still do for my personal finances. When I switched accountants, he said I HAD to use Quickbooks to work with him.

Your husband is right, it is hard at first but get easier over time. It will give you a lot of reporting and billing features that you won't get in excel. In a couple of clicks I can have a report of how profitable each of my rentals is.

But my advice is use what your accountant wants you to use.

Gino Barbaro · Answer

@Karin

I form an LLC for each property or business that I own.  I want to keep all of my assets segregated so I do not commingle funds, have asset protection for each entity and have proper record keeping.  If you start out, you may as well start out correct.

If you own 2 houses that are let's say 30000 each, it may not be worth forming 2 LLCs.  That is your own personal decision.  But if a tenant sues in property A, then both properties are at risk,  What is the chance of something egregious happening, not very high.  But unfortunate situations do occur and you need to protect yourself.

It is best to speak to an attorney as well as a CPA who won real estate or has clients with real estate holdings and ask them what they would do with their portfolio.

Once again, people will say it is expensive and a lot of work.  I would rather pay a bit more to know that I have a level of safety.  And once you begin to grow, as I'm sure you will, protection will only become more vital.

Gino

QUICKBOOKS, Is it the only way?

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