quickbooks p&l and balance sheet reports

24 Replies

I currently have quickbooks premier and just started using it for my real estate flips. I previously was using excel sheets and plan to transfer to quickbooks. i would like to have the purchase price of the home also on the p&l report and the rehab expenses ( material, labor costs, utilitiy payments, paid property taxes ) on the balance sheet. I'm aware of using classes to identify the property. What account from the chart of accounts is the way to classify purchase price and rehab expenses to get the the data on both the p&l and balance sheet? 

Your purchase price should not be on the P&L.  It is an asset, not an expense.  Your rehab should also eventually end up on the Balance Sheet.  

If it's a flip, you can be more flexible. 

But something is either an expense or an asset.  Not both.  

Rule of thumb for accounting, bookkeeping, reporting ..

  • Loans are Liability (Balance Sheet)
  • Purchase of property (Balance Sheet) - watch out for expenses that can be deducted for rental properties ( that is why you need to speak to an accountant)
  • Sale of property (Profit & Loss)
    • Transfer all money from Balance Sheet to Profit & Loss
    • Follow the HUD to double check the balances and make adjustments
  • Money Spend:
    • Flip
      • Rehab (Balance Sheet)
  • Rental
    • Maintain properties (Profit & Loss)
    • Capital Improvements (Balance Sheet)

Of course there are more steps - this are very basic. As to using QuickBooks - always use Classes for all your properties. Review your cash flow by property as well.

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Late to the quickbooks party. Have done about 20 flips so far this year using excel as our accounting method.  Moving everything over to QB for 2016.

I use hard money on 95% of my flips, where do I input the loan amount into QB? How do I categorize it in my chart of accounts, and once the property is sold where do I put loan.  

Also, same question for the purchase price.  Do people separate out there closing costs also, or just lump it into the inventory when it's a current asset and put it into sales once the property is sold?

So @Matt Welch let me ask you couple questions:

- Loan amount - do you think it is income, expense, asset or a loan? That is the Account Type you will use

- So what happens to the loan when you sell the property?

Gita

should my balance sheet differ from the tax balance sheet on the IRS Form 1065 Partnership tax return? 

I can't get my accounting equation assets = liabilities + equity to balance. I know the liabilities is correct. I think the problem maybe somewhere in the asset portion. Do I need to remove land from the assets or show that separately? Fairly certain equity portion is correct.

Big if. What if I can't balance before April 18? I filed an extension last year really don't want to again.

If your balance sheet balances in Quickbooks, then why can't you get it to balance on Form 1065? 

Land is shown on the balance sheet. There is a separate line item for Land on Schedule L, Form 1065.

@Kevin Polite

@Lance Lvovsky that's the problem. I took over my day to day accounting from my Accountant. On December 31, 2015 they didn't balance on the bank statement, but he said they balanced on the taxes. 

@Daniel Hyman  He did mention he wasn't depreciating the land, but. Assets don't have a separate line item for land. Should there be?

Your accountant should have provided you with a balance sheet that balanced. Can you use the 12/31/15 balance sheet as reported on the tax return, Form 1065? That should be your starting point for 2016. 

Originally posted by @Gita Faust :

Rule of thumb for accounting, bookkeeping, reporting ..

  • Loans are Liability (Balance Sheet)
  • Purchase of property (Balance Sheet) - watch out for expenses that can be deducted for rental properties ( that is why you need to speak to an accountant)
  • Sale of property (Profit & Loss)
    • Transfer all money from Balance Sheet to Profit & Loss
    • Follow the HUD to double check the balances and make adjustments
  • Money Spend:
    • Flip
      • Rehab (Balance Sheet)
  • Rental
    • Maintain properties (Profit & Loss)
    • Capital Improvements (Balance Sheet)

Of course there are more steps - this are very basic. As to using QuickBooks - always use Classes for all your properties. Review your cash flow by property as well.

 How long would you estimate it would take for one to learn quick books accounting? My excel method is getting cumbersome. That said, I feel as if I am missing out on expenses/deductions I forget to note due to busy medical practice and other non-accounting tasks.

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Originally posted by @Logan Allec :

@Andrey Y., you are a radiologist.  Your time is worth a heck of a lot more than a bookkeeper's!  Hire a $50/hr bookkeeper to do what he or she does best while you make $200/hr doing what you do best.

 I have been told this before. But I am self managing a few rentals in Hawaii, so I still get the occasional call from tenants for small repairs. So my question is, how would the bookkeeper play into this? Since I would have to let them know every time an expense comes up (and would they need access to my bank accounts to know that rent was deposited!) it seems like I would be doing much of the work anyway. 

Also, the renewing and confirming insurance/proof to the lender gets kind of tedious as well.

@Kevin Polite

Ask your former accountant for the adjusting entries that make your 1065 balance with QB if you can't figure it out from the 1065 itself.  This is something that should have been provided to you at the time the tax return was completed.

With these adjustments you should be all set.

Ed

@Andrey Y.

Learning to use Quickbooks is pretty easy once you have the software configured for your business. 

Most bookkeeping can be done via email if you scan documents and transactions to your bookkeeper.  Depending on the level of activity you have, the bookkeeper could enter transactions weekly or a couple times a month and reconcile bank accounts.

Good luck

Ed

@Andrey Y.  Sorry for the late reply. Just got back from India.

It does not take much time, if you have the procedure, process and a system to follow. It takes:

- 1 minute to enter a tenant from contact details, lease details, deposit and invoices. 

- less than 20 seconds to enter a check. 

It all depends if you want to use it as a check register or track your financials by property, unit and tenant including cost segregation.

Originally posted by @Gita Faust :

@Andrey Y.  Sorry for the late reply. Just got back from India.

It does not take much time, if you have the procedure, process and a system to follow. It takes:

- 1 minute to enter a tenant from contact details, lease details, deposit and invoices. 

- less than 20 seconds to enter a check. 

It all depends if you want to use it as a check register or track your financials by property, unit and tenant including cost segregation.

 Even that sounds like 'Greek' to me. Is there a book/resource you would recommend to get a handle on Quickbooks?

What do you mean by check register? Cheers.

A check register in QuickBooks looks exactly like your check register in your checkbook that you carry around with you to write checks.  (Most people just use credit cards now and don't carry around too much cash or a check book)

But in a software program, any time you make a deposit into a checking account or write a check, it will be inserted into a Check Registry that keeps tabs on deposit and withdrawals  that you make from a certain bank or all banks that you use in QuickBooks. 

@Account Closed I noticed your book on Quickbooks for Landlords. I bought a similiar one a couple years back but yours appear to be more up to date. Problem, to me with QB, is you really need to know Accounting principles or maybe I just overthought or didn't have the time to thoroughly dive into it.

Kevin, I am not an accountant, but with years of study, I have earned enough credits to become one.

I learned QuickBooks by studying it and playing around with it.  (I've been using it since 1998).  Once I thought I knew how to do everything I became a Certified QuickBooks Pro Advisor.  I soon found out I didn't really know much at all, foolish me for thinking so.

Being a landlord myself helped me be able to design things in QuickBooks that we as landlords want to see and know.

I took my experience and my love of teaching and began teaching QuickBooks to others, using words that everyday people can understand, and not words of an accountant.  

One thing I've learned is that people, as a rule, have a tendency to make things harder than what they are.  I am a big example of that.  (Sometimes I out think myself and am my own worse enemy).  And that is what's happening when people believe that QuickBooks is hard. 

Yes, it does take the right words and lots of visual to teach so that others can understand, but each person has their own way of teaching.  

Not that you asked me a question, Kevin,  I'm just responding to your comment to me.

Nancy Neville