Curious about how other investors, say 25 units or less, manage their bookkeeping needs. We have developed a pretty effective, but cumbersome excel process, but are now looking to really streamline things from a financial record-keeping standpoint and allow our skeleton crew more time to concentrate on growing the business and less time wrestling with our P&Ls. If you have any suggestions to products or providers that are a good and trustworthy resource, please share. Please also share any techniques or practices you may perform to help keep this most critical component of real estate investing under control.
@Steve James Most small (and some medium sized) business use Quickbooks and similar software. Excel is great but it's not designed as an accounting software. Hence, you will always have a cumbersome process (no matter how great your Excel skills).
I do agree that good bookkeeping is a critical, oft ignored task. It is great to see you guys focusing on this. Best of luck!
Have you talked to any bookkeeping service about their costs. Its probably less expensive than you think to have it outsourced and run by a company that does it for a living. I talked to a few companies a few months back about this and for my company 2 principals, about 5-10 large flips/developments per year was only about $200/month for them to do the books.
@Steve James excellent question! Based on my experience, you're looking for three different things
1) Dedicated accounting platform: While programs like Buildium say that they have accounting features, these are usually clunky, don't include the balance sheet, and don't include "umbrella" or administrative costs that can't be tied to a specific property. You'll want something like Quickbooks or Xero to be able to automatically collect and handle all of your financial data and run reports.
2) Receipt management: Especially when dealing with crews of people or multiple jobs at once, it's entirely possible that more than one person is making purchases for your business. The best way to know what these expenses are is to save the receipts/invoices. You'll want a system that automatically syncs these invoices to your accounting software, saving you time and making it easy for your crews to take photos of these receipts instead of stuffing them in their pocket and forgetting about them.
3) Mind reading: Even with receipts, bank statements, and an accounting software, there's things about your business that only you know. Short of hiring a psychic, there's plenty of information about your business that you'll need to actually tell someone in order to effectively do your bookkeeping. What you'll want in this case is a dedicated bookkeeper that uses their own systems and procedures to collect and save this kind of information, so that they can understand how you and your business operate, all while managing the first two points for you so you can go on vacation and enjoy your portfolio.
Hope this helps!
Thanks guys. You provided the two options we posed for ourselves: modernize some back-office or sub it out. Getting more comfortable with letting a bookkeeper hit the quickbooks on our behalf.
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