All Forum Posts by: Dan V.

@Natalie Kolodij or @Michael Plaks What if the situation is the other way around, refinance primary residence to payoff rental property mortgage? What will be the tax implication on the interest? Will it be considered business expense or will it be itemized deduction? I'm still learning...

One of the RE books I read suggested that you should form a team (including accountants) who are also RE investors themselves. Which makes sense because I'm pretty sure they will make themselves aware of any legal ways to maximize the tax benefits. 

@Account Closed You don't need to include payments to contractors using credit card. They will be receiving a separate 1099K for those at a certain threshold. When you used quickbooks to generate 1099 report, it will automatically exclude any payments from credit card account. 

From 1099-MISC instructions:

Form 1099-K. Payments made with a credit card or payment card and certain other types of payments, including third-party network transactions, must be reported on Form 1099-K by the payment settlement entity under section 6050W and are not subject to reporting on Form 1099-MISC. See the separate Instructions for Form 1099-K.

@Jon S. I'm glad you're able to connect it!

Since you already decided to go with Quickbooks (good choice by the way!). If your accountant offers QB training or consultation, I would recommend sitting with him for an hour or two to go over your set up and procedures, this is also important. You can also search online for tips/tricks on how to automate certain tasks and utilize the full features offered by QB. Or if you have any specific questions, feel free to ask here in BP. 

@Sharon H. Tip: You can actually open multiple screens in QBO. Once you opened the company account, right-click any of the left tab/menu to see the options, then click Open link in new tab or Open link in new window. You can do this as many as you want. Make sure though that you don't change the company file or go back to the firm's dashboard on any of the windows, otherwise, the other windows will error out due to data conflict. 

So far, I have no issues loading company files, especially for RE industry since the volume is not as large as in other industries like retail. 

@Ken Keati Quickbooks is pretty popular here as accounting software especially, for multiple properties. Some prefer online version over desktop while some prefer the other way. Either version will give you the report you need to help you analyze the business and for tax preparation. Note, however, that QB (or any other accounting software) is not industry specific so it is crucial to set up your books the right way, as well as your accounting process, based on your specific purpose. Asking your existing or future accountant for recommendations is also a good idea. 

@Zevi Arem When you prepare the budget, you should have criteria on what item belongs to each bucket (R&M, PM Fee, Capex, Turnover, etc.) and once money starts coming in & out of the property, categorize each actual transactions using the same criteria you use for budget categories. Then periodically, you can compare your actual vs your budget to figure out how's the property performing and adjust your budget or your strategy accordingly.

As far as bank account, one checking account will work but some prefer to have another account to physically separate the reserve funds. You don't need separate funds for each budget category, one operating account, and one reserve account is usually enough. 

Yes, budget can be done in Quickbooks. Others are also successful in using Excel only. Good luck!

@Howie Baker You might already know this but accounting year could either be fiscal (starts any month, ends after 12 months) or calendar (January-December). When the report says "year to" that usually means the reporting period starts from the start of the accounting year and ends with whatever the indicated end date. "Year to date" means the start of accounting year thru the date report was run. So if it says "Year to month end" I would interpret it as the start of accounting year thru end of October. The question is, are they using calendar or fiscal year?

The best person who can answer your question is the person who provided the report, it is a valid question, and actually indicates you're paying attention to details. 

If the rental and flipping business is under the same entity, then I suggest using one software only, Quickbooks in this case. The online version will give you more flexibility on your choices of CPA. Desktop version will cost you less but you might be limited to local CPAs only. If you already have CPA, you can ask for a recommendation, if not, include this question in your screening process. Good luck!