Rental Property Investor · St. Louis, MO · Member since 2016 · 199 posts · 22 votes
Hey BP.
I'm kinda freaking out about taxes. I just started real estate investing half way through the year and am about to buy another rental. I created an LLC a couple of months ago in preparation for the second unit, but haven't used it yet. I've talked to a CPA who is REI minded, but since I just started with REI, I haven't been keeping good records of what's a business expense and what isn't. I work at a bank and have no trouble pulling statements and such. But I'm concerned about the things I don't have receipts for that I'd like to deduct, plus I don't know how I should approach future deductible purchases.
Are there some CPA's out there that could help me with a just a couple of questions to set my mind at ease? I'm not trying to have a full sit-down conversation, just a few things here and there that need to be addressed so I can sleep at night...haha (kinda kidding, kinda not)
CPA · Raleigh, NC · Member since 2013 · 1k+ posts · 2k+ votes
9y
@Tyson Hosey as long as you didn't pay cash, you're probably going to be fine. Even if you did pay cash, there are ways to "recreate" transactions and show support.
I'm sure any CPA, myself included, will give you a few free pointers on how to develop better bookkeeping habits, record maintenance, etc. However digging into your personal situation and evaluating your records vs what you can expense will cost money for any serious service professional.
Rental Property Investor · St. Louis, MO · Member since 2016 · 199 posts · 22 votes
9y
@Brandon Hall Absolutely. And as I typed out one of the questions I had....seems like more of a full-on consultation type of question..
The future bookkeeping stuff I feel like I can do, I've been using Evernote to track deductible expenses, should I take the plunge into quickbooks, or is that necessary?
CPA · Raleigh, NC · Member since 2013 · 1k+ posts · 2k+ votes
9y
Depends on what your situation looks like. If you have a handful of properties, use the accounting method I described on my BP podcast:
1. Set up a checking account for each property.
2. Make sure all income and expenses flow through that property.
3. Reconcile in December. Easy.
I wouldn't get into QBO until you can streamline a simpler solution. QBO will cause the same pains until you can get into a great habit of recording expenses.
Rental Property Investor · St. Louis, MO · Member since 2016 · 199 posts · 22 votes
9y
@Brandon Hall Sounds good. I only have 1 property right now and under contract on another, and I have a checking account for each at the moment. What about the smaller purchases for deductions things like: I just purchased two books from BiggerPockets... Is it the same if I take the money out of my regular W-2 income to pay for that and still deduct it, or should I take it from my rental income (profit). If I can get the hang of how to do the little things like that, I can apply it to almost everything else that I've bought and will buy.
P.S. I started a few months ago listening to the BP podcast and decided to listen to every episode from #1 on and I haven't made it to yours yet, I'm on #163
Rental Property Investor · St. Louis, MO · Member since 2016 · 199 posts · 22 votes
9y
hahaha I just finished 163, so I think I can make an exception this one time and jump to yours. I'm blaming this all on Amanda Han, because her second episode was a few back and it just spiraled from there haha
Investor · Fort Bragg, NC · Member since 2016 · 59 posts · 20 votes
9y
@Tyson Hosey In my practice I have my clients bring me any expenses they think can be tied to the business. Then we sit down and go over them and come to agreement. All that just to say talk to a CPA or Enrolled Agent and let them help you.
Rental Property Investor · St. Louis, MO · Member since 2016 · 199 posts · 22 votes
9y
@Scott Vance that's probably what I'm going to end up doing, I was just hoping to be concise and prepared so that it's easier on her. But for this first time, I might just have to gather them and have that sit-down time to cover what is and what isn't. Because I honestly don't vary with my purchases very often, so doing it once, would allow me to learn going forward and be able to be super prepared next time.
Rental Property Investor · St. Louis, MO · Member since 2016 · 199 posts · 22 votes
9y
@Brandon Hall Follow-up- just listened to your podcast and that is some fantastic information. I know it was only a couple months back, but do you still use/recommend Xero?