Hey- so I'm bored even asking this question, but unfortunately this seems to be important according to the asset protection person I'm working with.
I flip 20-30 houses a year. I'm going to be doing this in a Series LLC soon. My asset protection attorney said to have one 'operating' account that pays out and receives all money, and then have the individual 'Series' hold title to the property but not actually do any transactions.
Since I will only have one operating account but will have 3,4,5,6 series at one time going, plus 4 different LLCs for rentals, tracking income and expenses from the one operating account back to like 7 or 8 LLCs is giving me a migraine just thinking about it.
Do you guys have an accounting/expense program/software/whatever that allows you to 'tag' income and expenses to a specific LLC? Do you know if Quickbooks can do it and if so what the functionality is called?
Thanks for any advice on keeping track of income and expenses for many different LLCs from one operating account.
I believe you would just create separate accounts for each entity to keep the funds separate. But if that is not necessary, then you can create different GL accounts for each entity. There are a few QuickBooks experts around here that I am sure will jump in.
Right now I use Quicken Rental and created tags for each property/LLC and I also keep separate accounts for each LLC. It is pretty easy. However, my accountant wants me to switch to using QuickBooks since the balance sheet and reports will give him everything he needs and he said that now that we are getting bigger it is better to keep track in QuickBooks since it is designed for businesses. I am not looking forward to converting everything and learning a new system.
Hi Beth- thanks for reply but given the amount of houses I'm flipping and the fact I'm using a Series LLC isn't feasible to have separate bank account for each LLC, that's why I need to keep everything in the 1 operating account and 'tag' the money to the LLC.
Normally I don't do this, but here it goes.
QuickBooks is a software program that landlords can use to keep track of their real estate investments, whether flipping them or not. So basically, it is a software program that we need to help us understand where we are in our business.
HOWEVER, with that said and done, if we decide to use a TAX SOFTWARE PROGRAM, with QuickBooks, (doing our taxes ourselves) then that is a different story!!!! We better to it right! So don't do what I'm about to suggest!
I would say 99% of us have a CPA do our books, therefore we can do things in QuickBooks that other people can't if they are going to use QuickBooks with an accounting software program, e.g. doing it themselves. So what I'm about to tell you is something that you should not do if you plan to do your taxes yourself, but only if you have an ACCOUNTANT.
SETTING UP YOUR COMPANY IN QUICKBOOKS
Well, you can setup your main company as Johnathan C's Investments
Then setup all your LLC's as a class. List all the properties for that LLC as a sub class.
Then, setup your LLC's (individually) as a Customer, with the properties of that LLC as a Job, then make the tenants of that property as a job of the property. see example below:
Big Time Realty LLC
1102 Hartwell Street
Do you see where I am going with this?
Maple Street Apartments LLC
7778 Maple Street Road
If you want to use one bank account, you can use Johnathan C" Investments Bank Account. You could make each LLC a sub account of that bank account. Then you will still be able to balance all your income and expenses via one bank account statement. But you are going to have to link everything to the correct LLC's and properties, etc. Which isn't hard. That's why you have everything setup as a class.
Once again, if you were doing your taxes yourself, you would need to setup all your LLC's in their own individual company file.
So is this protocol? There is no law, that I know of, that says you have to use QuickBooks as though you were and are an accountant.
The reason we buy QuickBooks is not only to have something to give to our Accountant at the end of the year because the Government says we must, but for US to keep track of OUR OWN STUFF! That's the main thing.
So...off the record...this is an option for you. AS LONG AS YOU HAVE AN ACCOUNTANT!
Foot Note: Security Deposits should be put into a Security Deposit Trust Fund Accounts. In some states that is a law, so check with your state law regarding that.
Use Classes in QuickBooks.
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