Bank account set up for 2 partners while doing real estate

Contractor · Chicago, IL · Member since 2020 · 25 posts · 8 votes

Hello everyone, so my business partner and I are moving into real estate. Mainly buy and hold with some flips mixed in for extra operating revenue. My question is how should we set up our bank/credit accounts to be the most efficient? Any feedback helps! Thank you

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Lee RipmaPro Member
Rental Property Investor · Prairie Village, KS · Member since 2015 · 2k+ posts · 2k+ votes
6y
@Thomas Weiss - so this is a very personal and situation specific question. However, I'll tell you what I do in case it helps. Every property I own is in an LLC. Each LLC has it's own bank account. Both my partner and I are signatories on that bank account. It's easy to setup a biz account using the EIN. When I'm doing a flip I will hold multiple props in one LLC. I know, it's terrible. But I don't want to mess with so many tax returns. I then have all my bank accounts and credit cards in Quickbooks. I go through and put all the expenses into categories at least one a month. It's really important to be organized and you DON'T want to be doing it with spreadsheets.
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Bill HamptonBusiness Member
Accredited Investment Fiduciary, AIF®, Financial Planner, Tax Strategist, Real Estate Investor · Atlanta, GA · Member since 2012 · 2k+ posts · 979 votes
6y
@Thomas Weiss
You should separate bank accounts for buy and holds and flips. Flips are taxed as ordinary income and buy and holds are taxed as passive income.
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Basit SiddiqiBusiness Member
Accountant · New York, NY · Member since 2015 · 8k+ posts · 3k+ votes
6y
@Thomas Weiss

How are you and your business partner operating - within an entity or as tenants in common?
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Brian G.
Rental Property Investor · Los Angeles, CA · Member since 2013 · 1k+ posts · 1k+ votes
6y
@Lee Ripma do you take care of all the QB on all of your properties or do you hire that out? If you DIY is that something that will allow you to track all the different properties separately with different partners, etc? How big is the learning curve?
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Lee RipmaPro Member
Rental Property Investor · Prairie Village, KS · Member since 2015 · 2k+ posts · 2k+ votes
6y
@Brian Gerlach
I have it setup myself and did it myself for the first 2 years but I have an assistant who actually goes in and categorizes things and does the reconciling. I’m honestly terrible with QB, I tried to find someone to set it up correctly or a class but I never found one. Even though I made a few mistakes with setting it up my goal was to be able to run a report by property and know exactly rehab costs, with that I succeeded. When you set it up just get the version that has classes (I think it’s 70/mo). I made a class for each prop and then linked all my bank accounts. I don’t love it but spreadsheet accounting is horrible. Hopefully that was helpful!
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Brian G.
Rental Property Investor · Los Angeles, CA · Member since 2013 · 1k+ posts · 1k+ votes
6y
@Lee Ripma I was hoping I could come over to your place and you could teach me LOL! Currently I do excel accounting myself (1LTR/1STR) and it’s very manageable with 2 properties but I may partner on a deal or two or three and I like the idea of being able to pull up a monthly/quarterly PnL statement, etc. Have you tried XERO? I’m wondering if that’s an easier option. I would like one place to track everything while being able to isolate/pull up reports on each property, etc.
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Anthony Wick
Rental Property Investor · Ankeny, IA · Member since 2017 · 2k+ posts · 3k+ votes
6y
@Thomas Weiss
LLC. Bank account for LLC only.
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Lee RipmaPro Member
Rental Property Investor · Prairie Village, KS · Member since 2015 · 2k+ posts · 2k+ votes
6y
@Brian Gerlach
Never tried xero. I think all accounting is accounting so would be similar. My system with quickbooks works and it’s far better than excel.
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