Multiple Entities (LLCs) in QuickBooks

10 Replies

Has anyone attempted to use one instance of Quickbooks for multiple entities, such as LLCs? I'm struggling to figure out how to best set this up, and do not want to purchase (or have to manage) two separate accounts.

Dawn, your check is in the mail.  (smiling) 

Okay this is the scoop.  

If YOU are doing your own taxes, you would have to enter all your LLC's as a separate company. However, I don't know of any investor/landlords who do their own taxes. Instead we give our data from QuickBooks, via our Profit and Loss Reports and Balance Sheets to our Accountant or CPA.

The reason behind having a separate company file for each LLC, is because each LLC has a different company name. But because we have our accountant filing the actual tax returns for us, all they need is the information from us regarding our company(s) and they do the rest. That's why we pay them the big bucks.

So this is how you can setup all your LLC's in One Company File. You will list each LLC as a class. But you will have to make sure you link every transaction that pertains to that LLC to that LLC. So this means you have to focus on what you are doing when you do stuff like this.  

Then when you need to see what your Profit and Loss is on each LLC, you just run a Profit and Loss Report by Class. (which of course is your LLC, and list each property that this LLC has, as a sub class)

Once again this method is only if you are not doing your taxes yourself, but are giving your data from QuickBooks to your accountant.

A lot of times we worry about entering our data into QuickBooks like an accountant.  However, most of us (if not all) buy QuickBooks for our use only, and use the Reports, or back up copy to give to our accountant or someone else.  And I think this is why the big hangup on why some people find QuickBooks intimidating. We feel we have to do everything according to Accounting 103.  

For example, professionally, we should assign each transaction as a Schedule E, and get into all that big heavy duty stuff using Schedules and depreciating, etc.   But because we turn over our data to an accountant, they do all this for us. All we want to know is where we stand financially and who owes us rent, who is late, and pay our bills, and then see if we have money left over to buy some more.  The accountant is left to deal with the big guys, the IRS.  

So, I hope I have helped you in making your life as an investor a little bit better when it comes to QuickBooks.

Nancy Neville.

Hi Alex,

Patrisha here - Ben's wife.  He actually pulled me over and asked me to comment on this one because I'm the one who handles the books in our house:)  

We've always used Quickbooks and we do not do our own taxes.  For convenience sake, I do not send reports to my CPAs, instead I copy back-up files of all my companies and just give them the memory stick.  It makes tax time much more efficient because they have all our info upfront, and we just have to spend time discussing tax strategy...far more important than counting beans.

We manage 4 files of our our Quickbooks Pro software.  Basically, one company for every set of returns we file. Any time we set up another entity, I set up another company.  Quickbooks will allow you to set up multiple companies with one purchase. These companies are just files yours software, and its easy to switch back and forth. I say its worth it for the time savings at tax time.  

Initially, I hesitated too at the idea of managing multiple accounts  but its really not a problem. 

I'm assuming you're using your Quickbooks for your rentals.  I set my properties up as classes and my tenants up as jobs. You can also set your properties up as jobs and your tenants up as sub-jobs.  

The big secret in being successful with Quickbooks is setting up your reports to work the way you need them to, but that's an entirely different conversation!

Good luck!

-Patrisha

@Nancy Neville . Wow! This is super helpful! I really appreciate you taking the time to put all this information down - I'm going to need some time to digest this, as I am a total newb with QB and literally just getting started in entering the info, but it sounds like what I need to do is possible. Just one more quick question for you: am I going to run into any issues with doing this if I am doing it using the online version versus the desktop version?

@Ben Leybovich and Patricia. Thank you very much. I appreciate you both taking the time to create this informative response. It sounds like you recommend a different approach to Nancy - rather than adapting to the terminology within QB, you would use a different file for each LLC or entity. Can you speak to whether this makes it any easier or harder for you when tax time comes around? Are there any other reasons to use a separate file versus tracking by class and subclass as Nancy mentions?

I am planning to have a CPA do my taxes this coming year for the first time ever - I've always used Turbotax in the past, but that was before getting into REI beyond my first rental.

Thanks!

I concur with @Account Closed ; I have one copy of the Quickbooks software but use it with multiple company files. One limitation to that is that I can only have one company file being used by the software at any time - no simultaneously open company files. 

@Alex M. I strongly sugest you meet with your CPA ahead of time to set up all your accounts and reports correctly so that tax time will be much easier and your reports will be giving you the most useful correct in formation.  You can't improve what you don't measure so it's important that your measuring your financial health properly, good luck!

The online Version that has the Class Feature is about $39.99 a month. (So that's $479.88 a year) Whereas the Desktop Version that has everything you need is a one time fee.

As a person who prefers to list all my LLC's in their own company file, just because it is the proper way to do things, I do understand that others, like yourself, want to do it in one comany file. And that was your question, can you. And the answer was yes you can. But by doing it in one company file, you will have to really focus on what transactions belong to what LLC.

So...some stuff to think about.  The proper way?  or a "making do way"?

Nancy

Originally posted by @Alex M. :

@Ben Leybovich and Patricia. Thank you very much. I appreciate you both taking the time to create this informative response. It sounds like you recommend a different approach to Nancy - rather than adapting to the terminology within QB, you would use a different file for each LLC or entity. Can you speak to whether this makes it any easier or harder for you when tax time comes around? Are there any other reasons to use a separate file versus tracking by class and subclass as Nancy mentions?

I am planning to have a CPA do my taxes this coming year for the first time ever - I've always used Turbotax in the past, but that was before getting into REI beyond my first rental.

Thanks!

Any entity that has a tax ID number is its' own company - keeps things very clean. So, my wife and myself are a company, because we have SS numbers. Each LLC, S Corp, C Corp with their Employer ID numbers are separate companies. Even thought the LLCs are flow through entities, it keeps things simple to track by having them separate - especially at tax time...:)

Free eBook from BiggerPockets!

Ultimate Beginner's Guide Book Cover

Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!

  • Actionable advice for getting started,
  • Discover the 10 Most Lucrative Real Estate Niches,
  • Learn how to get started with or without money,
  • Explore Real-Life Strategies for Building Wealth,
  • And a LOT more.

We hate spam just as much as you