Start up expenses and Quickbooks - Please help.

[Greg Wilson]

Good Evening my fellow Comrades, I have a few questions I hope someone can help me with. I purchased a buy and hold rental property last year (2019) and have just completed a complete rehab of the property. I spent $110K on the property and have spent $20K over the past 8 months getting it ready to rent. I know I need a CPA and I am in the process of interviewing them. In the mean time I need to get my books in order for my 2019 taxes. Here are my questions.

1. I just opened my business account, however the $130K was paid for with personal funds. I have not started using the business account yet.

2. How do i enter these initial $130K in "Startup Expenses" in Quickbooks Pro? I thought I would just show it coming from my "Petty Cash" account and balance it out with the "Members Contributions" account. I do not plan to pull these funds back out of the business at this time so i dont want to show as a loan. Instead of using the Petty Cash account I thought it might be cleaner to create a temporary "Startup Funding" Bank Type Account. Thoughts?

3. I also purchased a few tools for the rehab, can these be expensed?

4. Also should I use cash or Accrual accounting? I think most people will say cash.

5. Trying to decide how I was to categorize my "Operating Expenses" vs. my " Rental Expenses" I have seen some that actual use COGS to track Rental Expenses and Expenses to track Operating Expenses.

Thank you,

Greg

[Michael Plaks]

@Greg Wilson

Your questions betray complete lack of understanding of accounting in general, and real estate in particular. It's totally normal, but it's pretty dangerous to try to DIY it. I do not recommend to DIY QuickBooks even for people with more understanding of accounting.

Continue interviewing CPAs and then ask these questions of the one you choose. Recommendations will differ from one CPA to another, so it is pointless to implement what Susan recommends if Peter is going to dismiss them later.