Bookkeeping / Accounting Software

[Chris Seveney]

As my note business continues to expand, I am looking at upgrading my systems that I am using. I have converted from slack to pipedrive for CRM which has been a great experience. My next goal is to transfer from excel (which has done well for me) over to a bookkeeping software. I know a lot of people praise quickbooks and it's what a lot of accountants use so many prefer it, but interested to hear from note investor specifically on what they use. I have heard some people use wave because it is free but challenging for having multiple notes. Also curious why you decided for that software and was any of the decision based off of the fact that a percentage of properties will become REO's which may be retained. My ideal software would be a program to track income/expenses for both my LLC and SDIRA. Run P/L reports and also be able to segregate each note specifically. At this time I do not see a need for bill paying etc. And some of the other bells and whistles Please note at this time I do not plan on outsourcing it as I have some family assistance who can perform data entry etc.

[Adam Adams]

I use QuickBooks. Use the desktop, which will allow you to manage multiple LLC and your personal accounts. The online version will charge per entity. The desktop version is one price for countless entities.

To help you with keeping books for notes, Debbie Mullens, can help. She has been doing books for other note investors. She has been teaching me how to use QB with notes and she can teach remotely. Send me a message and I'll shoot you her contact info. I do not think she is on BP.

[Patrick Desjardins]

Ask your accountant what he wants you to use. The reason why most people use Quickbooks is mostly because that's what accountants use and it makes it easier to transfer files and generate reports. As Adam mentioned, mine did recommend the desktop version as well.

[Chris Seveney]

Adam Adams Patrick Desjardins

Thanks for your guidance

[Mazen Al Ashkar]

@Chris Seveney Hi Chris, 

What did you end up using? QB desktop? Curious to see if i can leverage your research. Also, do you have JV agreements in your business model? If yes, what would you recommend the best setup to be? So far, i've been doing everything manually in excel and it's kind of driving me crazy now, too much manual work, so appreciate your input.

[Bob Malecki]

Fyi I've been using Quickbooks desktop app for about 15 years to run multiple businesses I own and it is very robust for detailed accounting and reporting. If you are looking for a fairly simple app, check out Waveapps, they have a free cloud based platform that connects to your bank account to automatically import new transactions. Its fairly simple as far as features so don't expect a lot but I found it perfect for keeping track of my JV deal books and it allows me to invite my JV partner to have a "view only" login to see all activity. https://www.waveapps.com/

[Mazen Al Ashkar]

Originally posted by @Bob Malecki:

Fyi I've been using Quickbooks desktop app for about 15 years to run multiple businesses I own and it is very robust for detailed accounting and reporting. If you are looking for a fairly simple app, check out Waveapps, they have a free cloud based platform that connects to your bank account to automatically import new transactions. Its fairly simple as far as features so don't expect a lot but I found it perfect for keeping track of my JV deal books and it allows me to invite my JV partner to have a "view only" login to see all activity. https://www.waveapps.com/

 Thanks Bob. Can you please advise on how you setup your different loans in waveapps? I don't think they have the concept of Classes like QB. Appreciate your help. 

I'm still trying to understand the basics, things like:

1) How do you record JV's financial contribution?

2) How you record income and expenses per asset? The use of classes in QB helps i believe

3) How do you record investments to hedge funds? In this case, i have money coming in from JVs and i'm using that money to purchase notes.

Appreciate your help

Mazin

[Bob Malecki]

Hi @Mazen Al Ashkar well if you require classes like QB then I would recommend QB. As far as contributions to the account you could set up a separate equity account in the Chart of Accounts and show the deposit there. Any investment in a note or hedge fund would be under an asset classification in Chart of Accounts, like Notes & Loans Receivable

[Linda Hastings]

@Mazen Al Ashkar I'm not familiar with waveapps, but is it possible to have a separate file for each JV deal (like separate companies in QB)? Not sure how cumbersome that would be, but since @Bob Malecki mentioned that with waveapps you can give "view only" access to JV partners, I assume separate files/accounts would allow each JV partner to only see things related to their deal rather than if you have one file/account where you track all deals together. 

[Andy Mirza]

I'm not an accountant and I don't claim to be one on the internet so consult your own accountant for his final say.....

I've talked to different accountants and bookkeepers and received different responses. The following is what I do based on what a couple of accountants have told me.

1) I record a JV's financial contribution as an "other liability," for accounting purposes only. It helps me keep track and I know when I return the investor's money, I zero out the liability. I treat it like a loan. You can certainly use Bob's suggestion as well but make sure you enter it correctly. Assets minus Liabilities and Equity equals zero.

2) I deal mostly with NPN's so my accountant suggested I treat it as a fix and flip and record income and expenses on the balance sheet. When I buy an NPN, I record it as an "other asset" using the purchase price. All expenses, starting with BPO, O&E, DD, and later monthly servicing, REO rehab costs all go to the cost basis of that asset. When I liquidate the asset, the proceeds go to zeroing out the asset and whatever gets left goes to "Gain/Loss on sale," which is an income account. I used to use a "Note Payable" other liability to pay out JV partners but I've found that I can just do it straight from the "other asset" NPN.

For performing notes, I was advised to use Income and Expense accounts but the only ones we had recently we flipped after a few months so I stuck with the above formula. Doing it this way makes my reports a lot cleaner and more meaningful. This company I'm talking about has rental properties as well as NPN's and listing the income and expenses from the NPN's makes the P&L unuseable to gauge the performance of the rentals.

3) I'd record investment to a hedge fund as a loan or equity account. On my books, it would look like "Loan to XYZ Company" and would be an "other asset." Or it could be "Investment in XYZ Company" and would be an "equity" account. As far as the second part, I would record your incoming money as an "other liability," (John Doe Investor Loan). When you buy your notes, you record the purchase as an "other asset" (123 Main St Note).

That's what I would do. Hope this helps!

[Andy Mirza]

@Mazen Al Ashkar (I forgot to tag you for the above response)

[Matt Henshaw]

Does anyone have a recommendation of someone who would be a good resource to help setup Quickbooks?

[Dan V.]

@Matt Henshaw Check out  Daniel Hymann.

[Account Closed]

I’m a huge fan of Quickbooks (desktop version). I wanted to try the online version for a previous venture but it had some limitations (I believe importing data files if I recall which wouldn’t be relevant to notes).

I would like to remind everyone that whatever you choose MAKE SURE IT’S BACKED UP. This can’t be stressed enough. I personally use Carbonite for everything, but there are other options. Just make sure you do it.