Business accounting

[Anthony Murphy]

Hi everyone. I will be forming an LLC for note buying as well as tax liens and some private lending. Anyone involved with these things that have formed a company have any advice on accounting practices? I don't know what would be the easiest way to track things, through accounting software or just save everything, organize it at the end of the year and give it to the accountant. Any advice is appreciated.
Thanks,
Tony

[Christian Carson]

I have tried the various tax lien software options out there and haven't found them to be terribly useful except in specific jurisdictions. I keep a master spreadsheet for all tax liens which includes the purchase date, price, interest rate, all the deadlines, and the current status. The spreadsheet is filtered so it hides the redeemed liens by default, and also calculates the ROI based on the purchase date and redemption date.

Frankly I don't think you need a piece of accounting software unless you're invoicing people (which you may want to do if you're a private lender). The most important organizational technique in this business is to have a very solid method for logging in redemption notices or payments when received, and make sure to calendar all the relevant deadlines.

If you're looking for a way to produce interim P/L statements other financial reports, look into Wave or Kashoo. They are both free. Kashoo is the more powerful of the two due to the ease of forcing a journal entry. In the case of tax liens, an LLC would treat them as inventory: the purchase price is logged as COGS, and the redemption payments are sales revenue.