All Forum Posts by: Michael Ghim

Your LLCs are mostly for asset protection. You typically want at least one in every state you're doing business. Some people use a rule of thumb of not having more than $250k in equity in your properties that are inside the LLC to make it less likely you are sued. Tom Wheelwright has some good books on this and how to structure it for liability protection and tax purposes. I've personally set up my LLCs following the per state and $250k equity rule and I do have a separate bank account for each LLC and sub accounts for each property. I use Baselane as my banking and bookkeeping platform, which makes this very easy to do. Everything is tied to the master account, which is my holding company, then broken down into sub accounts per LLC and per property. I also have virtual credit cards assigned to the various properties. It's layered, which in many ways isn't simple, but it does make it much easier to do my taxes at the end of the year because of this layering. Everything is dropped into the right categories and assigned to the right properties because I have it set up this way. You either spend the time categorizing your revenue and expenditures as you go (easier) or at the end of the year (harder IMO). And you are totally right, bookkeeping is a headache no matter what unless you're just really good at it, but necessary for your business. 

The wife maintains separate bank accounts for each rental & escrow accounts for each of the properties we seller financed. (Now down to 42 accounts).

It was a life saver during our first extensive IRS Audit, as they checked detailed ledger entries etc etc on all properties going back 7 years. Our most recent Audit ran from Mar-May this year & required weekly 2-3hr phone calls. The Auditor required the same detailed accounting by property, going back from 2019 to 2012. These detailed records, (many copies of which had to be scanned & emailed to them), saved us from any 'taxable consequences'. 

There are so many ways you can do this, in my personal opinion, many ways work, it's all about what works for you. Do you have a bookkeeper or someone helping you prepare taxes or are you managing the finances all on your own?