3 properties in LLC....seperate bank accounts?

Question

Hey there BP members!  I just started a LLC last year and have since put 3 proeprties in the LLC.  Should I open 3 separate bank accounts for these proeprties all in the LLC name or is it ok to keep all rents and expenses coming out of a single account?

Also I would like to ask if anyone has a good recommendation for a CPA to prepare taxes and give tax advice in the southern California area (LA or San Bernardino Counties).  Greatly appreciated.

Tri

Ned Carey · Answer

You absolutely do not need a separate account for all your properties. I would consider that bad practice, inefficient and amateurish.

However you most likely need at least two accounts. One for operations and in most states you need a separate account for security deposits. All security deposits can go in one account but they must be in a separate account for your day to day business account.

Account Closed · Answer

One account is fine.  Commingling funds is not an issue since it's all the same company.  But, you do want to keep track of what expenses and income apply to which property if for no other reason than knowing how each property is performing.  I use one account and the "class" feature in Quickbooks so I can keep each property separate.

Aaron Mazzrillo · Answer

Frankly, I don't know exactly what the law requires as far as security deposits go when it comes to interest. I don't pay it. I keep security deposits in a separate account because it isn't my money and when it comes to playing with other people's money, I treat it as if I'm playing with a part of their life. Unless they "came into money unexpectedly" (which is not the situation of any of my tenants) they probably had to work a lot of hours to save up that money and I don't want to take any chances that I inadvertently spend it on a deal or something. So, other people's money goes into a trust account, or as I have it labeled in QB, Tenant Security, and I keep my filthy paws off of it.

On the up side, the account is in my name so it looks like I keep a fairly high balance at all times which has opened the door to healthy credit lines with my financial institution.

Aaron Mazzrillo · Answer

@Ned Carey nailed it.

Personally, I run 3 accounts - checking for obvious reasons. Savings to hold extra capital you don't want identity thieves having access to and because keeping huge piles of money in a checking account is just not wise, and the security deposit account.

Jo-Ann Lapin · Answer

I would consolidate in 1 business account just for simplicity

Account Closed · Answer

@Aaron Mazzrillo, I'm only talking about California here: do you keep a separate account for security deposits for your own  bookkeeping reasons or because of some law?

Assuming the OP's LLC owns the properties I can't see where a separate account is required for security deposits.  This piqued my interest so I pulled out my Nolo "The California Landlord's Law Book: Rights & Responsibilities" and it says: "No state law requires landlords to pay interest on security deposits.  In most localities, you don't have to pay tenants interest on deposits, or put them in separate bank account - unless you require this in your lease rental agreement."

I like your comment about a second account for holding the bulk of money.  I've been doing that too ever since a banker explained how easy it is for somebody to raid your checking account.  When you stop and think about it the checking account number is all over the place, it's on the checks, it's detailed in the wires, it's all over town and probably the world.

Tri Phung · Answer

Thanks Theo and Jo-Ann!  If I did that should I worry about commingling funds?

Thelonious Jones · Answer

I would do a single bank account.

1 bank account per llc - usually less headache and paperwork for your cpa/bookeeper. But I would check with a cpa/bookkeeper just to get a 2nd opinion.

Hope this helps

3 properties in LLC....seperate bank accounts?

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