How do people manage their bank accounts, spreadsheets etc.

Question

I currently have 2 properties and plan to refinance both of them soon. I am a "B type" person and struggle with organization skills. I have one main checking account for my LLC to help separate it from my personal banking. I plan on buying multiple properties in the coming months but being able to keep up with everything is already a challenge. Any suggestions on processes or systems that make everything much easier?? Also, I would like to note that I do not know how to use Excel.

Some questions I have:

-Should I have separate accounts for each property?

-How or where do people scan in physical receipts?

-What is the best way to calculate and keep track of all expenses and cash flow both monthly and yearly for each property?

-What is the best system to be best prepared come tax season as far as having everything organized for my CPA and having the documentation I need in case of an audit?

-Where are state specific lease agreements that I can access for land lording?

Any advice will help. I am currently shopping for a PM to help me with this but would like to know what people do managing their own stuff. Thanks!

David Simon · Answer

I have two properties and use QuickBooks, with a separate book for each one. And I have my own small business unrelated to real estate and have another file for that in Quickbooks. As was mentioned before, there is certainly a learning curve. My accountant sat down with me early on and taught me the basics. And that was well worth the time. I've never found a book that helps all that much, but if anyone has a suggestion for that, I'd love to know it.

As far as saving receipts, I rarely do. I save invoices from service providers like contractors, plumbers, etc. Those I scan in and have a file on my computer. But for random trips to HomeDepot, I just enter the info into QuickBooks and toss the receipt. I figure my credit card statement retains the transaction amount, so I figure that will cover me.

Peter M. · Answer

If you can't make your own spreadsheets or databases, quickbooks is usually a good option for bookkeeping. I used excel for a long time but I got a new CPA and she made me start using quickbooks. There is definitely a learning curve but it sounds like you will have that no matter what.

QBs can split everything up by class. So each property would be its own class and you can run different reports to see every property separately. Your bank feeds can upload directly into QB and then you sort them to the respective Class. If you have multiple LLCs you will have multiple bank accounts and it can handle that as well. Your CPA will help you set it up but if you have a PM they will do it for you and send you a report which you will just forward to your CPA.

You have to pay for new versions periodically but that expense is deductible as an expense.

Dan V. · Answer

-Should I have separate accounts for each property?

No. One business bank account is enough and much more simple. As others suggested, do not mingle personal and business transactions. Some states require you to have a separate bank account for tenants security deposit, if not, one is fine.

-How or where do people scan in physical receipts?

Some accounting software (like QBO) let you attach documents in the transaction.  There are also apps available but I prefer doing it directly in the accounting software or something that integrates with it.

-What is the best way to calculate and keep track of all expenses and cash flow both monthly and yearly for each property?

A good accountant/bookkeeper and/or a good software.

-What is the best system to be best prepared come tax season as far as having everything organized for my CPA and having the documentation I need in case of an audit?

I highly recommend using Quickbooks Online, especially if you are planning to use a remote bookkeeper or CPA.   As far as documentation, I recommend keeping electronic copies of at least all closing statements, loan docs/statements, and bank & credit card statements. Google Drive or Dropbox are some of the free cloud storage and can easily be shared with your accountant if needed whenever and whereever. If you will use an accounting firm, some have a client portal.

-Where are state specific lease agreements that I can access for land lording?

BP has those forms if you're a PRO member.

Goodluck!

Kevin Smith · Answer

QBO Plus will set you up for scale; if you get it through your CPA you can get a good discount.  With QBO Plus you'll be able to do class tracking as mentioned above.  Also, with any QBO tier you can use the mobile app to upload receipts to transactions.

Costin I. · Answer

@Caleb Clay How much time and/or money are you willing to allocate to these tasks? Your answers will change based on that.

My 2¢:

-Should I have separate accounts for each property? You don't need separate account per property, but you need to separate business dealings from personal dealings. And that means clear bookkeeping, if you keep all in your name, and separate business bank accounts and clear bookkeeping if you hold assets in an LLC.

-How or where do people scan in physical receipts? You can get mobile apps that act as scanners for receipts or buy documents scanners for all physical receipts, invoices and documents.

-What is the best way to calculate and keep track of all expenses and cash flow both monthly and yearly for each property? Nobody know the best way, but I can tell you how we are doing it: we use Quicken to track all our finances and also for properties bookkeeping. I highly suggest you do the same, as once setup and got everything tracked in it, it will give you clear sense of incoming and outgoing, net worth, assets and liabilities, etc. Additionally, we use a set of spreadsheets for categorization of rental expenses, plus another for property maintenance, task lists, etc... PM me if you want more info.

-What is the best system to be best prepared come tax season as far as having everything organized for my CPA and having the documentation I need in case of an audit? Use Quicken or Quickbooks. Track properly and organize the expenses in appropriate categories (rental income, maintenance, utilities, office expense, advertising, legal, and another 10 other categories). Track your mileage.

-Where are state specific lease agreements that I can access for land lording? You can find landlording forms here at BP if you are a PRO. You can find state specific information and lots of good books for landlords at NOLO. But beware, at least here in TX, you can't use a realtor lease agreement unless you are a licensed one - and there is a paragraph that invalidates the whole agreement otherwise - so we had to draft our own.

But then again, how much time and/or money are you willing to allocate to these tasks? A bookkeeper starts I think at $50/hr, a CPA at $150/hr and a property manager will take 10% + extra. You can put some money and time and get it setup and then just use your time to maintain it or you can pay others to do it for you. Ultimately, you'll still need to know how to do it (, otherwise how will you know if the resources you hire are doing it the right way?) since most are just tools that will give you results based on how good you wield them.

Let me know if you need more help on the DIY system.

Bernie Huckestein · Answer

I'd make a couple of comments:

I use Quicken for all my bills, personal and real estate...I have not written a paper check in years.  Business wise quickbooks or any number of others are probably better for the situation you describe quicken would work fine.  I do for sure have sperate personal and business accounts...this is a must; however, I do pay multiple property bills from a single business account...tracking it is just a matter of creating property categories eg 123mainst:Electric, 123Mainst:Taxes, 456AppleSt:Electric..).

You didn't specifically ask the question but you may want to limit the number of properties in one single LLC for asset protection purposes...others here are more qualified to chime in on that, mine are not 1 for 1 but it is also not 1 for everything

b

Account Closed · Answer

@Caleb Clay Answers to your questions:

-Should I have separate accounts for each property?

I would recommend an account per LLC.

-How or where do people scan in physical receipts?

Some prefer attaching receipts to each transaction in QuickBooks. I prefer having folders (physical or DropBox, Google) set up by month so that you can just drop each receipt (preferably in order by date) in each month for the year.

-What is the best way to calculate and keep track of all expenses and cash flow both monthly and yearly for each property?

QuickBooks or other accounting software via bank feed (set up classes for QuickBooks Online) with receipts being your ultimate back up.

-What is the best system to be best prepared come tax season as far as having everything organized for my CPA and having the documentation I need in case of an audit?

See receipt documentation above. Keep for 3 years.

-Where are state specific lease agreements that I can access for land lording?

Check out BP's new section on leases or discuss with lawyer.

Caleb Clay · Answer

Awesome guys. Thanks for the input. I have an email out to my CPA now and I'm looking into QB!