Seattle, WA · Member since 2017 · 72 posts · 23 votes
Hi everyone,
When first starting out, what did you do to keep track of your expenses, revenues, receipts, quotes, numbers, numbers, money, money, etc...? What software or programs helped you the best?
Also, what were some of the mistakes you made that you wish someone had warned you about?
I am looking to purchase a quad in Fresno but a big part of my hesitation is keeping track of the finances. Even with a degree in finance, I am very nervous of what I should do. I know I can't know everything starting out, but I want to make sure I set up a good bookkeeping foundation versus cursing myself down the road.
As always, I appreciate everything you guys have to say...it has all been so informative and helpful!
Accountant · Philadelphia, PA · Member since 2013 · 303 posts · 210 votes
9y
I use this google sheet to track my properties and think that it's sufficient. It's modeled after the Sch E and the only think it doesn't include is depreciation so it's east to give to whoever does your taxes. You can change around the categories however you want and keep a contemporaneous log of your miles as well.
Not sure if I'm allowed to link so mods delete it I'm not supposed to.
Guys, thank you for validating the advice from others.
I think I'll do a mix of using excel and taking quickbook courses as well as other templates to know what types of things I should really focus on and don't want to forget. Thank you for all of the help!!
Madisonville, LA · Member since 2017 · 10 posts · 3 votes
9y
I like Quickbooks which should be easy to stay on track on a small scale once set up. The new QB allows for auto import from your bank account and most of the work will be done for you once it learns your transactions (I don't recommend qb online but that's a preference. It has a different layout than the normal qb and can be really slow). Since you are cash basis all you are doing is accounting for cash that goes in and cash that goes out based on bank stmts. once you get familiar with it you should be able to reconcile quickly. You can easily create income statements and balance sheets that look professional that you can provide to banks or other investors. Just as important you can provide to your tax professional at year end (if you don't do taxes yourself). I've also heard that fresh books was a good program for the non accountant so you may want to check out.
Investor · Thermopolis, WY · Member since 2012 · 4k+ posts · 4k+ votes
9y
@Rosy Bruno, my original method was probably too simple. I made sure to put everything through the bank account and kept a detailed check register. Every deposit had a note about where the money was from, and for every check what was bought. I had about 6 file folders set out with tenant applications and leases in one, taxes in one, insurance in one, etc. I had a folder for receipts for building supplies, etc, another for money paid to vendors like plumber, electrician, painters etc., and another for things like mileage, and another for depreciation schedules. That worked for a few years until my wife got a hold of it and started a double digit accounting system.
Property Manager · Louisville, KY · Member since 2017 · 49 posts · 24 votes
9y
@Account Closed Hey Tim, thanks for sharing the document. Had a question for you and hopefully it helps others as well.
I am not too familiar with book-keeping just yet but I am in a similar position as Rosy (buying my first multi family property within the next 7-8 months). That being said, I was curious if you could potentially elaborate or explain what the sheets labeled with the months are for (such as Jan, Feb, Mar)?
The main variable that is confusing me is the "mileage/miles driven" and "mileage calculator". What exactly does this pertain to?
@Account Closed Hey Tim, thanks for sharing the document. Had a question for you and hopefully it helps others as well.
I am not too familiar with book-keeping just yet but I am in a similar position as Rosy (buying my first multi family property within the next 7-8 months). That being said, I was curious if you could potentially elaborate or explain what the sheets labeled with the months are for (such as Jan, Feb, Mar)?
The main variable that is confusing me is the "mileage/miles driven" and "mileage calculator". What exactly does this pertain to?
Anyone, feel free to hop in and help answer.
Thanks!
Corbin, for the first several years, I used a spreadsheet as well. At the time, I worked for large companies and I had to file an expense report every month, so I modeled the spreadsheet like an expense report.
Instead of the 12 months going across, had expenses categories going across, with a column for each expense item. So the first column after description would be adverting expenses, then auto, all the way to other, if I count it right, 15 columns. Unlike the expense report, every time I book an expense, I write the description of it in the left column, column name description, and write the amount in the appropriate column. So if I had a plumbing repair, I would record plumbing repair in the left column called description,, and going to the column repair and record the amount. You can add a column to mark down the date of the bill next to the description column.
Because I had no idea how many rows the spreadsheet would run, depends on the number of expense items for the year, I program a row at the top of the sheet for totals rather than the bottom. I believe this sheet requires very elementary knowledge of spreadsheets. Basically at the end of the year, you total the columns.
Originally, I actually did it like an expense report. In an expense report, you hand one in every month, and there is one space for a category total. So you total up the bills for category, write it in, and attach the bills to the expense report. So if you do it monthly, attach all the bills to the monthly spreadsheet, that's also a good way to tract expenses and file if you own a small amount of properties like a 4-plex
Rental income can be done the same way. I had a friend who owns a 32 unit apartment building, and years ago, had a chart hanging in his office, designed like a spreadsheet. The name of the tenants are on the left column, then the columns go from Jan to Dec on the top. The chart is about 3 feet across by 2 feet high. When the rent is paid, it's marked paid with a large red cross using a magic marker. So if you walk into his office, look on the wall, if the month of July has red crosses from row 1 to row 32, then every one paid. If there are boxes missing the red cross, some tenant didn't way. You can see how easily adapt this to a spreadsheet. But thinking back 30 years, his wall chart was a darn good idea.
Madisonville, LA · Member since 2017 · 10 posts · 3 votes
9y
@Corbin Wafford he has the excel workbook set up to have each tab roll up into the summary tab. So for example, once January is complete, it will show up in the January column on the summary tab.
As far as mileage, for taxes you are allowed to write off either actual expenses (like gas, repairs, etc) or use a mileage rate - you must pick one and stick with it. Its probably easier to use the mileage rate as you are just keeping track of the miles driven that pertains to your properties/business (keep a log of what the mileage pertains to...which this would suffice the way its set up in the spreadsheet). The mileage rate also takes into account vehicle depreciation.
I can't tell if he has the mileage expense roll up or if its just collecting for tax purposes but keep in mind these are estimated expenses and its not actual cash coming out of your account.
Rental Property Investor · Madison, WI · Member since 2013 · 629 posts · 339 votes
9y
Thanks for posting your spreadsheet, Tim. We use a simpler Excel sheet- it has the added feature of a column to keep track of which property the expense went with, so all our three properties are in a single spreadsheet.
Our columns are:
date | description | which house | vendor | cost | mileage associated, (if applicable)
Right now, all we have to do at the end of the year is separate by house, and separate into categories for Schedule E. I might try and incorporate the dropdown menu for categories. I like that.
Specialist · West Hartford, CT · Member since 2016 · 549 posts · 53 votes
9y
Has anyone looked into having a Virtual Assistant run their bookkeeping though Quickbooks? I have found this to be extremely effective and successful for saving me time and allowing me to focus more on my deals rather than the boring backend work. Not to mention having the Virtual Assistant handle all of my social media marketing and phone work.
Chicago, IL · Member since 2017 · 4 posts · 1 vote
9y
@Rosy Bruno you can try to use Zip books...it's like a free version of quickbooks. That is what I use and you can link your bank accounts. It has a pretty easy set up and is user friendly and the best part is that it is free.
Rental Property Investor · Northern NJ · Member since 2019 · 672 posts · 677 votes
6y
Originally posted by @Account Closed:
I use this google sheet to track my properties and think that it's sufficient. It's modeled after the Sch E and the only think it doesn't include is depreciation so it's east to give to whoever does your taxes. You can change around the categories however you want and keep a contemporaneous log of your miles as well.
Not sure if I'm allowed to link so mods delete it I'm not supposed to.
Rental Property Investor · Louisville, KY · Member since 2019 · 37 posts · 61 votes
6y
Just skimming through this there's been a lot of great advice. Personally as someone whos 9 to 5 is an accountant, I would encourage you to use Excel first if this is your first business purchase. You will be able to categorize expenses easier and since this is your first business purchase any way you can cut costs it would be wise, IMO. The extra fee that you pay towards Quickbooks Online could go towards something else, but again that is totally up to you. It is an extra deduction come tax time as I'm sure someone has cleared up in this forum long before this. I am currently in the process of saving for my first deal and I plan on using an Excel spreadsheet that will track all of my expenses, cash flow, as well as mortgage details.