Newbie Question #6: Tracking Expenses

[Elisha Keller]

Good morning BP! I'm getting awesome feed back to my "Newbie Question" each day and I'm learning a ton! One thing that BP and other sources are driving home for me is that real estate is a business. As a business, you need to keep records, track expenses, have separate accounts, etc. So with this in mind the newbie question of the day emerged:

How do you track your expenses (excel, QuickBooks, pen and paper)? Do you have separate accounts, if so how are they broken down? How do you file receipts? Do you write things down everyday, once a week, once a month. when tax time comes around?

[Roy N.]

@Elisha Keller

I would suggest that, in the beginning, you use which ever method (spreadsheet, paper ledger, accounting software) is most comfortable and easiest for you.

Ideally, you would make each property its own cost centre, but if you make the book keeping too elaborate it will become too much of a chore and it won't get done {just ask my accountant ... and our new book keeper}.

I would also discipline yourself to sit-down at least once a week to ensure everything is recorded - if you wait longer than that you will forget things. If you wait until tax time, your family will disown you :)

The key thing is to ensure you are tracking everything.

One you are recording everything, then find yourself an accountant who can advise you on how to tweak/alter your recording to facilitate reporting, forecasting/budgeting, taxes, etc.