Setting up Bank Accounts

[Wendy Forbes]

I will check with my CPA as well, but am interested in BP members' best practices for setting up bank accounts for rentals. I am transitioning my rentals into LLCs and plan to have a separate bank account for each. I also have an LLC for overall management of my business. I am unclear how to allocate expenses between my property LLCs and my management LLCs. For instance, if I go to Home Depot and buy a vanity and a range for Property LLC and also buy a drill and some other supplies that will be used for all my properties, do I have to purchase the general supplies using my management LLC bank account, but the property specific items out of the Property LLC account? Seems incredibly cumbersome.

[Account Closed]

A lot of unnecessary work going on here!

You will have to set up a separate company file for each LLC. (As Andrew stated above) This is because each LLC has its own name and therefore will have it's own tax filing.

Once you setup each LLC in its own company file then you will be able to set up a bank account for that LLC and you will deposit all income to that bank and write checks for all properties under that LLC (expenses) and come up with an accurate Profit and Loss Report and Balance Sheet.

To account for all non-specific properties, in each LLC; let's say you purchased tools to work on all your properties, you will list that expense as an "Office Expense" and then you can sub-categorize these expenses as "tools" etc, since you will be using these tools for all properties no matter what house you are working on. However, if you buy a vanity, this will be for a specific house, that will be linked (via the class section of QuickBooks) to that particular LLC and that particular home that you are working on in that LLC.

I see so many people make too much work out of using QuickBooks, when really QuickBooks was developed to take the "Load off" of you so you have time to buy more properties and be successful.

Nancy Neville