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Updated over 6 years ago,
Help me brainstorm on where to put these expenses?
I started this business around 5 years ago and 2 years ago brought in an unsalaried partner. My partner Kevin has an equity stake in all of my businesses now:
Biz #1, he has 15%. This company has around 15 rental properties.
Biz #2, 25%. Around 15 properties
Biz #3, 50% - Around 25 properties.
Some of my major expenses are:
Private contractors, around $200K/yr.
Software/website/private contractors, around $40K/yr.
Travel for business development/sales $10K/yr.
Would love your 2 cents on how I should assign the expenses (e.g. which companies should pay them) as they all benefit each business and assigning expenses to certain businesses would affect partner Kevin differently?
One idea is let's say I have $200K in expenses, I just divide it based on the % of properties. So if Biz #1 has 20% of the properties, Biz #1 pays 20% of the expenses.
That being said, I'd be open to simplicity just because ultimately it's only a difference of a few thousand and we both don't care much.