All Forum Posts by: Cara Powers

@Cory Cox

You are absolutely right to wait until January. The later in the year you wait, the more expensive it gets. Sending you a DM.

So, whichever software you decide on, you need to get an expert in that software to convert your spreadsheets into one or more company files in that software. Because you have been doing your own bookkeeping, you may be tempted to do it yourself or hire your regular accountant to do it, but that could be a huge mistake. With QuickBooks Online (and probably Xero or Freshbooks) the kind of conversion you are planning is part of an advanced certification. 

I am currently using QBO Plus to do the bookkeeping for someone with a Turo car rental business, a consulting business, and e-commerce business, and residential and commercial properties, so I know QBO can do what you want it to do. It may be more expensive than the other options you mentioned, but a major advantage of QuickBooks is that is has 80% of the market share here in the United States. That means that you have a much broader pool of talent to do your conversion and teach you how to do your bookkeeping if you decide to use QBO than you would if you use another option. Also, a lot of QBO Bookkeepers will pass on their wholesale pricing. 

Just remember, you need an expert in advanced categorization who also knows real estate bookkeeping and taxation to get the results you want.

I think a multi-member LLC (taxed as a partnership) is the most flexible option. However, you absolutely need lawyers to write your partnership agreement. You need to agree in writing to the rights and obligations of all partners, and you all have to agree on how you are going to distribute income, gain, loss, deductions, and credits for tax purposes.

The IRS has a requirement that for something to be a separate business venture, it has to keep a separate set of books. So if these 10 LLC's have 10 separate owners, they would indeed each need their own individual QBO file. However, if your company owns 10 LLC's the thing to use in QBO is "Locations" not "classes." Each location would need its own bank account, and the balance sheet for each location would actually balance. Using classes does not result in balance sheets that balance by class. Get in touch if you have questions.

@Zach Westerfield There is definitely a difference in user experience. Be sure to check out the +New button to see all the options listed there, and get to know the gear icons. QBO is set up to make migrating from Desktop relatively easy, but not everything has a one-to-one transfer. Also there is a specific order of operations when converting that I'm not sure you'll be able to find instructions for online. It might save you a lot of frustration to find an Advanced QuickBooks Online ProAdvisor to do the conversion for you. The "Advanced" in this case is important.

@Zackary Phillips You can absolutely track income and expenses by property with QuickBooks Online. There are a few ways to do it, but the simplest is to make each property a customer and each unit a sub-customer. Then when you tag each income and expense transaction with a customer, you can generate P&L's and Statements of Cash Flow by customer and/or sub-customer. Let me know if you have any questions.

An individual can use any method they like to account for capitalized and immediately expenses expenditures (including the shoe box method).

An individual who infrequent and sporadic flips, would report the expenses (if any) on Schedule C and the disposition of the asset on Schedule D (capitalized costs add to basis and reduce the capital gain).

An individual who is flipping houses as a business reports their income and expenses on Schedule C. Because the IRS classifies individuals who actively purchase and remodel real estate for profit on a continuing basis dealers rather than investors, capitalized costs are transferred to Cost of Goods Sold when the property is sold. Income is also subject to self-employment tax.

You sure can. Keep track of all income and expenses. You'll report the ones associated with the rental on Schedule E of your 1040.

@Zach Westerfield I have used both though I hadn't upgraded Desktop since 2015; I like Online better. The bank feed functionality is superior. I like the receipts feature on the app (you can take a picture using the app and it will store it in the cloud). You can email bills and receipts to a special email address for storage in the cloud and so your bookkeeper can access and enter them. The graphics on the dashboard are superior. Instead of going to a special screen, graphic representations of sales, expense, cash balance over time, and others are on the first screen you see when you log in. The only thing that QuickBooks Desktop Contractor Edition has that I want to see in QBO is estimates. To get the same kind of reports in QBO, you have to set up individual budgets for each year for each project.

Also, it will be much easier to find a remote bookkeeper if you switch to online. QuickBooks Online Accountant is free. The latest version of QuickBooks Desktop Accountant, the first version to allow syncing with customer files without having to send each other backup files is $449 a month ($799 if you run Mac like I do). So, understandably, more bookkeepers are going to have QBO than Desktop.

You'll have to tell me what kind of work you want to do in QuickBooks on an airplane. If you're just wanting to review financials, you can set up automated emails with any reports you could want to see in either PDF or Excel. Or you can spring for in-flight wifi; it's deductible.

@Carrie Torrey 

@Bill Hampton is correct. You don't have to limit yourself to someone local. Cloud accounting is awesome. Also, for taxes, you don't have to limit yourself to CPA's. Enrolled Agents like @Michael Plaks can be even better. However, both will charge you extra if they have to do your bookkeeping for the year before they can do your taxes. Look into getting a bookkeeper with experience accounting for real estate investment, preferably one who know taxes to get things ready for whoever is preparing your taxes.