non LLC , use personal checking account to pay mortgage and bills or open a separate

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non LLC , use personal checking account to pay mortgage and bills or open a separate

Tom Server
Member since 2023 · 118 posts · 26 votes

So I purchased a triplex in my name, do not have an LLC. Does it matter if I keep the rents in my personal accounts? Or should i open a separate checking and savings? I do I open a separate account and pay the bills and mortgage with that account.. or it doesnt matter if I use my personal account?

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Josh St LaurentBusiness Member
Financial Advisor · Stateline, NV · Member since 2023 · 131 posts · 122 votes
2y

@Tom Server I would echo what @Jonathan Bock and @Charles Carillo said. It's important to keep your personal funds separate from the funds of the triplex which is a business. Personally, I would advocate for opening an LLC (I use NW Registered Agent) and then open a business checking account (I like Relay) so that your funds are separate. This will help with a few things:

Liability - Current state if someone slips and falls at your triplex you could be sued and your personal assets could be at risk.  If you are able to put the property in a business name and separate the flow of money and put a wall between personal and business you can protect your personal assets.

Taxes - It is going to make things a lot easier at tax time to show your CPA what your expenses have been.  I usually suggest new property owners setup a business before they even close on a property and then use a business credit card for all expenses moving forward and also for them to link it to Quickbooks so everything is automatically tracked for them.


There are a lot of nuances and strategies but this is a 30,000 foot view of why you should opt for business>personal

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  • Charles Carillo
    Rental Property Investor · North Palm Beach, FL · Member since 2018 · 2k+ posts · 1k+ votes
    2y

    @Tom Server

    I would have a separate checking account for that specific property that you use only for finances associated with that property. It helps keep everything organized and separate. 

    1Reply
  • Jonathan Bock
    Accountant · Bryn Mawr, PA · Member since 2023 · 409 posts · 321 votes
    2y

    @Tom Server

    Agree 100% with @Charles Carillo

    Keep it all separate will help immensely 

    1Reply
  • Josh St LaurentBusiness Member
    Financial Advisor · Stateline, NV · Member since 2023 · 131 posts · 122 votes
    2y

    @Tom Server I would echo what @Jonathan Bock and @Charles Carillo said. It's important to keep your personal funds separate from the funds of the triplex which is a business. Personally, I would advocate for opening an LLC (I use NW Registered Agent) and then open a business checking account (I like Relay) so that your funds are separate. This will help with a few things:

    Liability - Current state if someone slips and falls at your triplex you could be sued and your personal assets could be at risk.  If you are able to put the property in a business name and separate the flow of money and put a wall between personal and business you can protect your personal assets.

    Taxes - It is going to make things a lot easier at tax time to show your CPA what your expenses have been.  I usually suggest new property owners setup a business before they even close on a property and then use a business credit card for all expenses moving forward and also for them to link it to Quickbooks so everything is automatically tracked for them.


    There are a lot of nuances and strategies but this is a 30,000 foot view of why you should opt for business>personal

    [email protected]415-915-5948
    Wealth In Yourself57 Reviews
    WebsiteView Page
    2Reply
  • Steve Vaughan
    Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes
    2y

    I established a mgt co (PM) for myself early on.  All rents and deposits are payable to and get deposited into that.  Expenses come out of it. 

    You could probably do the same with a simple dba at your existing bank or CU @Tom Server

    2Reply
  • Rob K.
    Encinitas, CA · Member since 2011 · 191 posts · 252 votes
    2y

    I think the main thing is do you have a book keeping system in place that allows you to efficiently break out all income and expense from the triplex, especially come tax time?  If you do, then maybe you do not need to establish separate accounts. If book keeping is not something you keep up with, then you are probably better off running all income and expense for the triplex through a separate account.

    1Reply
  • Diego AlvaradoBusiness Member
    Real Estate Agent · Flower Mound, TX · Member since 2016 · 298 posts · 139 votes
    2y

    My story is similar, I started with a rental, it was a lot of hassle to open LLC as the mortgage at the beginning won't allow it, but it is always convenient to separate the accounts for book keeping.

    You will see this as soon as you have to do your own taxes first time, it will be a nightmare to collect everything is you incur into maintenance cost or any other expenses even if small.

    [email protected]214-833-8911
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  • Jeff S.
    Specialist · Portland, OR · Member since 2010 · 3k+ posts · 1k+ votes
    2y

    @Tom Server there is no requirement but it is much easier to organize with separate accounts. You can take draws and make contributions as you see fit.

    1Reply
  • Tom Server
    OP
    Member since 2023 · 118 posts · 26 votes
    2y
    Quote from @Diego Alvarado:

    My story is similar, I started with a rental, it was a lot of hassle to open LLC as the mortgage at the beginning won't allow it, but it is always convenient to separate the accounts for book keeping.

    You will see this as soon as you have to do your own taxes first time, it will be a nightmare to collect everything is you incur into maintenance cost or any other expenses even if small.

     Can you still have tax write off, even if you dont have an LLC ?

    0Reply
  • Savannah Yingling
    Realtor · Chevy Chase, MD · Member since 2023 · 74 posts · 51 votes
    2y
    Quote from @Tom Server:

    So I purchased a triplex in my name, do not have an LLC. Does it matter if I keep the rents in my personal accounts? Or should i open a separate checking and savings? I do I open a separate account and pay the bills and mortgage with that account.. or it doesnt matter if I use my personal account?


     Hi Tom! I would also definitely consider a separate business account. I use Rentvine for all of our properties; finances and owner/tenant accounts all filter into this system. Someone mentioned Quickbooks, also another good option.

    0Reply
  • Kristen AmbroseBusiness Member
    Accountant · FL · Member since 2024 · 78 posts · 34 votes
    2y

    Congrats on the triplex purchase! It's definitely a good idea to get in the habit of tracking expenses related to that property separately. I prefer using Quickbooks to do this. This will be really helpful come tax time especially if you have other properties or plan to buy more. 

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    1Reply
  • Diego AlvaradoBusiness Member
    Real Estate Agent · Flower Mound, TX · Member since 2016 · 298 posts · 139 votes
    2y
    Quote from @Tom Server:
    Quote from @Diego Alvarado:

    My story is similar, I started with a rental, it was a lot of hassle to open LLC as the mortgage at the beginning won't allow it, but it is always convenient to separate the accounts for book keeping.

    You will see this as soon as you have to do your own taxes first time, it will be a nightmare to collect everything is you incur into maintenance cost or any other expenses even if small.

     Can you still have tax write off, even if you dont have an LLC ?

    Of course, you can do tax write off if you own investment property using Schedule E, but please consult with your CPA the best way to do this in your particular case.
    [email protected]214-833-8911
    Alvarado Realty Group522 Reviews
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    0Reply
  • Bill HamptonBusiness Member
    Accredited Investment Fiduciary, AIF®, Financial Planner, Tax Strategist, Real Estate Investor · Atlanta, GA · Member since 2012 · 2k+ posts · 977 votes
    2y

    @Tom Server

    A separate bank and separate credit card are good, but an LLC with a business bank account and a business credit is better. Why are you against an LLC? The cost of an LLC is tax deductible and if you decide to buy more properties you will wish you had an LLC from the start. Plan with the end in mind. Treat your real estate business like a business, not a hobby.

    404-482-3170
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  • Basit SiddiqiBusiness Member
    Accountant · New York, NY · Member since 2015 · 8k+ posts · 3k+ votes
    2y

    If the property is owned by you personally, use a personal account unless you have an agreement where the LLC is the property management company.

    [email protected]917-280-8544
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