Greetings BP Family
I am seeking advice on establishing an efficient process for keeping tabs on accounting. Our business is anticipating doing about 3-4 flips this year, so we are not expecting overly complex books. How are people handling keeping up with revenue, expenses and the like? I have heard quickbooks is a great resource or are we at the stage where we should be hiring an accountant? Looking forward to hearing ideas.
One does not replace the other. Quickbooks is software. A good CPA not only can provide accounting advice, but is knowledgeable in tax compliance and tax planning.
For someone who is expecting 3 or 4 flips, I do recommend using Quickbooks. I always tell clients it is best to keep a set of books as that will help you stay organized while maintains entity formalities. Quickbooks is fairly simply for the average person to learn.
Personally, I use an accomplished local CPA. I receive a discount on QB through his office. This gives me the best of both worlds. I am able to do my own book keeping, which allows me to save on costs and stay involved in my cash management. These positions are then communicated to my CPA, who serves as much more than just a tax professional. Your CPA has visibility on other investors' performance and also brings you connections in the local business and finance communities.
Thanks @Lance Lvovsky very helpful!
Yes. :) Quickbooks will help you keep your finances organized, and your CPA will love you. But Quickbooks isn't going to give you tax advice. IMO, hiring a CPA - especially one who is experienced with REI is going to be WELL worth the money!
I would say both. At least have an accountant set your Quickbooks and walk you thru the basics of using it. Then you can handle the more common transactions yourself and let the accountant handle the more complicated ones (ie. HUD settlement, loan). If you prefer to handle Quickbooks yourself, at least have an accountant take a look at it periodically to make sure things are in order. Quickbooks will do whatever you tell the program to do, but it won't distinguish right from wrong in an accounting/tax perspective.
@Lance Lvovsky nailed it. The consensus is to do both for stated reasons which I agree. Also, they say QBs is easy. However, I hired a book keeper when I went from excel spread sheets to QBs in 2003. QBs was not that easy for me but the book keeper and QBs keeps you organized and let’s you spend YOUR time doing deals instead data entry work. It also provides nice reports and comparisons. Each flip would be a seperste class. Get your accountant to help setup the QBs for best results.
@Lance Lvovsky said it best. They go hand in hand: the software (and good books kept within the software) is your Robin; a real estate savvy CPA on your team is your Batman.
One thing I would add would be to consider QuickBooks Online instead of the general QuickBooks Desktop software. The reason being that it's much easier to access, update, and share info between people (for example, between partners or between you and your CPA) because it's all in the cloud.
Good luck going forward!
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