Expense Tracking Software or Spreadsheets. Best Solution?

[Robert Stamper]

Hi All, My Wife, @Sarah Stamper is a flipper starting on her second property now. She does all her flips in a single member LLC to keep our taxes nice and simple. I was planning to get her set up with QuickBooks as a complete accounting solution, but since we are keeping her work in a Single Member LLC, my accountant suggested that I just keep the expenses in spreadsheets submit them at the end of the year. I like that idea (cheap and simple) but am I missing something? Is there some fantastic software out there that I should be using? Quickbooks is overkill right? Or is it? Thanks in advance!

Robby

[David Robertson]

I'm oversimplifying this, but the two most important things you need to track for flips are your Project Revenues &  Project Expenses.

In a flip there is Revenue generated from re-selling the property & the cost of goods sold (expenses), which is used to calculate your project profitability (net income) for each project. 

Your total net income from properties sold in a given year is your taxable income which is typically taxed at your ordinary tax rate.

#1 Project Revenue

Revenue for flipping is easy to track because it is generally just one entry for the resale value of the property.

#2 Project Expenses

Expenses get a bit more complicated because you will likely have a 100+ transactions for purchasing materials, paying contractors, & paying utility bills.

For Expenses I track:

• Track Expenses by Vendor - Helpful for filing Vendor 1099s at the end of the year
• Track Expenses by Category (Purchase, Buying Costs, Holding Costs, Selling Costs, Financing Costs, Repairs (roofing, siding, painting, etc.) - Helpful for tracking actual expenses against my budget. Also if you decide to convert the property to a long-term rental the improvements may be added to your capital basis & depreciated over time.
• Track Expenses by Account - Helpful for reconciling bank accounts, credit card accounts & expense reimbursements

You can do all of this in an Excel spreadsheet by just creating columns for Category, Vendor, & Accounts. Or there are also house flipping specific softwares for tracking project expenses.