All Forum Posts by: Dan V.

Are there any rules to follow when investing in opportunity zones? Like creating a separate entity, accounting process, tracking funds, investments, costs, etc?

For tax experts, if a rental property was purchased with existing tenants with the intention to completely demolish the building later to build a new one, is it possible to keep depreciating the cost of the demolished building? I've been reading about the tangible property regulations and using GAA election to keep depreciating the demolished building but I'm not sure if the scenario mentioned best suits this strategy. I appreciate any inputs.  

@Matthew Gardner As a newbie investor, I used a small local bank for 2 main reasons, it charges very little to no fees and no minimum balance required for a business checking account. It is also 5 minutes away from where I live, in case I need to be there physically. The negative side, their online banking system is not as good as other banks but I found out only after I opened the account. Credit unions also offer lower fees. Major banks charge you for everything but I know they waive some of their fees after you established a good relationship with them. But for starter, I would say a local bank or credit union with good online banking system is a good choice. Congratulations on your first deal!

Thank you for the responses. I checked the city website and found the contact numbers of the team leaders, gave them a call and was able to get some useful information. They did the inspections via video/facetime and got the approvals. 

@Account Closed If you have the partner's equity account as the main account then contribution and distribution account as sub-accounts, when you run balance sheet, you can easily see how much each has put in or taken out and roll up into the main account so you will also know how much is the equity balance for each partner. 

To take a step further, you can also add a 3rd sub-account for the income/loss allocation to capture the tax basis balance as Lance mentioned. But this may require assistance from your tax accountant to make sure it is captured correctly. Example below (60-40) partnership.

@Account Closed For partnership, it is recommended to have separate capital account for each partner and each capital account is further split into sub-accounts for contributions (money in) and distributions (money out). 

Anybody who has ongoing flip in Norfolk VA? Did you have any issues with your permit due to lockdown? We applied for a permit 3 weeks ago before they closed the city offices and now we are waiting for inspector to show up before closing up the walls. I appreciate any tips on how can I get the approval so we can finish up the rehab.

@Soh Tanaka Quickbooks has issues in tracking transactions by class especially for bank accounts, that's why it's not recommended to use the details of Funds Held by PM account when you review transactions by class. The only way you can get an accurate report by class if when you book everything using a journal entry which is not advisable either. 

Owner distribution from PM should be recorded as a check/expenses in the Funds Held by PM register payable to your name or LLC name, categorized as Undeposited Funds (then process bank deposit) or directly categorized to Checking account (where the fund is deposited to). It depends on whatever you trying to accomplish, but if your books and process are set up properly, you should be able to run report that will show you the info you're looking for.

As far as the different ways to process the revenue, creating an invoice and processing a payment will track (show in the customer transaction details) which customer paid and who hasn't and when you run P&L report in accrual, income will be recognized at the date of the invoice, cash basis recognized at the date of payment. Sales receipt will track (show in the customer transaction details)customer who paid but not those who don't, P&L report using accrual and cash basis will show the same result. Bank register deposit method will not show transaction in the customer transaction details, P&L report using accrual & cash will show the same result. I highly recommend the invoice method. 

But as Natalie said, this kind of issue is better discussed live with the professional that can review your set up and accounting process and at the same time help you navigate through the reports available that will show you the information you need. Good luck!

@Joe Carter Have you look at debt relief programs? The good thing, they can negotiate (or you can try) to pay only a portion of the credit card debt, the bad, you will pay a fee for the service. I bet the credit card company will accept it or not paid at all. Just make sure that whatever settlement you agreed to, that they will release you from any more judgment on the unpaid balance. Some state laws vary so you may want to check that as well. The bad, it will hit your credit score, the good, not as bad as bankruptcy though. The good, you will settle it for less and even arrange installment payment plan, the bad, be ready to pay taxes on the amount of forgiven debt. Anyway, I hope you figure something out. Good luck!

@Lynne Marquez The purpose of the Contractors tab in QBO is basically to separate 1099 contractors from Vendors or employees. If you add or edit a Vendor and check the field where it says Track payments for 1099, then that vendor will be added to the Contractor list. In order to track 1099 payments properly, you will need to have knowledge in both setting up QBO (vendor, chart of account, and mapping to correct 1099 boxes) and on the 1099 rules itself. 

The option to email the contractor to complete their profile sounds cool, however, not a single vendor responded when I used it. You are better off if you ask them to fill out W-9 instead, before issuing any payment. Good luck and I hope you can apply what you learned from the class in real life.

@Aiyman Khan Yes, you may include the wire fees in the cost of goods sold (once the property is sold) since it's directly associated with the property. This will depend on how you breakdown your costs, but at a minimum, flip costs are broken down into Acquisition Costs, Rehab Costs, Carrying Costs (or Holding Costs) and Selling Costs, and you can break it down further (into sub-accounts) if you'd like. If the fee is related to the purchase of the property, then you may categorize it under Acquisition, if to wire payment to a contractor, then it's Rehab costs, and so on. You can search up here in BP and surely, you will find bookkeeping guides to flipping using various techniques. Another alternative is to reach out to a professional to guide you in setting up your books and coach you in the process. Good luck with your new venture!