I hate my accounting system, shoe box with receipts, AHHHHH!

21 Replies

I have three SFH, and one under contract. At the end of every month I collect all of my receipts, and my credit card statement, add up all of my expenses and deduct that from my income. This process is ridiculous, please tell me what solutions have worked best for you and how to get started.

I hate your accounting system too! 

Get your accountant to set you up on QBO and sync it to your bank feed. (Because I know you have a dedicated business bank account) Then all of the transactions import automatically. It's SO EASY. 

Receipts you can then scan at your leisure and just store in a digital folder by month. 

Thanks Natalie, I do have a dedicated business account. However I use my amazon credit card to make most purchases, I use my checking account to pay bills like utilities, and sometimes I pay cash for things like gas. I use cash sometimes because I have a lawn care business, And sooo many people like to pay me in cash even tho I have PayPal and Venmo. I mobile deposit when they pay me with a check.

@Ben Morris hey Ben yeah I would set a bank account for each of your rentals or you could even do all of them under one account. Sync to your quickbooks and pay for everything with a debit card. When you swipe at Home Depot it will register in quickbooks and you just click expense and it adds it. I get rents venmo trnasfer straight to my bank account and I just add as sales. At the end of the year my cpa has access to my quickbooks and just prints a profit loss statement. It’s 21$ a month also a tax write off under office supply and software!

I'm with @Natalie Kolodij - I hate your "system" too.

I am guessing that cash leaves your pocket without having been logged as income at some point?  If that's the case, you're doing yourself a disservice in the event you want to qualify for a mortgage at some point.  I know that if it's a business expense, it's technically a net 0 transaction.  But sometimes that top line business revenue is an important figure.  

Also, it could be that mileage vs actuals is a better method for your vehicles, so not logging that cash income is really hurting you if you're going the mileage route.

Get yourself a better system, even if it's just a spreadsheet because, at this point, anything is better than what you've got now.

When I came out to LA to begin taking over my parents' RE business, the very first thing I set out to do was get our accounting in order. Their "system" was even worse yours; some of our tenants pay the rent in cash and it was not getting logged. We would often forget which contractor did what job on what property for how much, and whether we paid them or not. It was just really, really bad and we just were completely blind on our numbers.

Initially I studied QB for Landlords and even set up our accounts/chart of accounts. But I just didn't have the time to get proficient at it while at the same time starting up brand new construction of a 4-unit MFH in DTLA as well as take over all the landlording tasks.

So, just as @Linda Weygant mentioned, I just set up two Google sheets, with the primary goal of making it easy for data entry on the fly. The rental income tracker is very basic and has what you'd expect something like that to have. 

The expense/job tracker is a little more involved but not much. It tracks all the jobs we contract out (labor and materials). It tracks the job status itself, as well as the payment status.

Here's what my Vendor Job & Pay Status Tracker looks like:

There's some custom validation and dropdowns I put in there. It also has some basic level filtering and reporting. 

I spent about 2 hours on it so obviously it's fairly basic, but it does the trick really well. I love being able to just open this thing, and immediately know which jobs I'm waiting my workers to finish, or to see if I'm all caught up with paying them. I can set up some filters to report which contractors got the most business from us, how much we paid them monthly/yearly, and if we might think about negotiating better rates. 

Again, for me the most important thing is to be able to quickly input data via mobile while I'm out on a job site talking to contractors. I'm managing close to 30 properties and it's so easy to forget this kinda thing. 

I'll probably revisit QB later this year.

I use the accounting software in my property management software, Smart Property Systems.  It works great, is easy to use and I get reports as well, like my Schedule E and Profit Loss etc.

I literally am in the middle of switching to QuickBooks.  I purchased the desktop version when all the reviews I read said "desktop better than online" then my accountant says they like online better.  But of course, the price for online is outrageous.  More than twice the cost of desktop and you have to pay it every year.  So I'm sticking with desktop.

Originally posted by @Account Closed :

I literally am in the middle of switching to QuickBooks.  I purchased the desktop version when all the reviews I read said "desktop better than online" then my accountant says they like online better.  But of course, the price for online is outrageous.  More than twice the cost of desktop and you have to pay it every year.  So I'm sticking with desktop.

They're phasing out desktop and you have to upgrade it every 2 years now. It'll  be a while but they're pushing HARD for people to switch over to online. 

Your accountant should be able to get you a discount on QBO pricing through their wholesale account- worth asking about. 

@Natalie Kolodij

Even if they push hard, if there's a choice, and the price difference for 2 years between the two is something like $399 vs. $1440, it's an easy choice.

If I can get the secret wholesale price it's only twice as expensive instead of four times as expensive... which still seems expensive for what I'd use it for.  I'm entering like 10 entries per month into the register.  So with their pricing that's $3-$6 for each transaction I log.

@Ben Morris Get Quickbooks desktop. It's cheaper if you use it for multiple companies and you can use the older versions for a while. I'm still using 2016. Use classes for each rental.

@Natalie Kolodij I went from QB desktop to QBO and back to desktop a couple of months later. In a nutshell, QBO sucks and is more expensive, in my opinion. If they phase out the desktop version, they better upgrade QBO or they'll be losing customers, me for one. I'll just send my accountant exported excel files of my P&L's and Balance Sheets.


@Natalie Kolodij I went from QB desktop to QBO and back to desktop a couple of months later. In a nutshell, QBO sucks and is more expensive, in my opinion. If they phase out the desktop version, they better upgrade QBO or they'll be losing customers, me for one. I'll just send my accountant exported excel files of my P&L's and Balance Sheets.

They have made huge improvements to QBO just in the last couple years and continue to do so. There's going to come a point where you're stepping over dollars to pick up pennies by manually tracking all your accounting. 

It's not just about tax prep. It's about having usable information, financial reports for bank, forecasting. You need to get your money's worth out of having better software. 

Originally posted by @Caleb Heimsoth :
@Ben Morris

I am starting to use wave. Totally free. Check it out

 Last time I checked on Wave it did not allow sub-categories or classes. How are you differentiating between properties when you record income and expenses?

Originally posted by @Paul Allen :
Originally posted by @Caleb Heimsoth:
@Ben Morris

I am starting to use wave. Totally free. Check it out

 Last time I checked on Wave it did not allow sub-categories or classes. How are you differentiating between properties when you record income and expenses?

I’m not sure if you can create classes.  I think you have to do it manually.  Each of my properties is simply labeled with the address

Originally posted by @Caleb Heimsoth :
Originally posted by @Paul Allen:
Originally posted by @Caleb Heimsoth:
@Ben Morris

I am starting to use wave. Totally free. Check it out

 Last time I checked on Wave it did not allow sub-categories or classes. How are you differentiating between properties when you record income and expenses?

I’m not sure if you can create classes.  I think you have to do it manually.  Each of my properties is simply labeled with the address

 I like Wave's interface and I recommend it to clients who have small businesses or one or two rentals, but it just seems like the chart of accounts would get messy having the address in every income and expense line when you have 3 or more properties:

Main St Rent

Maple St Rent

Adams St. Rent

etc.

Reporting for individual properties also seemed problematic. 

Mind if I check back in a month or two to see if you are sticking with it and what your solutions are for some of those issues?

Originally posted by @Paul Allen :
Originally posted by @Caleb Heimsoth:
Originally posted by @Paul Allen:
Originally posted by @Caleb Heimsoth:
@Ben Morris

I am starting to use wave. Totally free. Check it out

 Last time I checked on Wave it did not allow sub-categories or classes. How are you differentiating between properties when you record income and expenses?

I’m not sure if you can create classes.  I think you have to do it manually.  Each of my properties is simply labeled with the address

 I like Wave's interface and I recommend it to clients who have small businesses or one or two rentals, but it just seems like the chart of accounts would get messy having the address in every income and expense line when you have 3 or more properties:

Main St Rent

Maple St Rent

Adams St. Rent

etc.

Reporting for individual properties also seemed problematic. 

Mind if I check back in a month or two to see if you are sticking with it and what your solutions are for some of those issues?

Yeah feel free too.  I’m still getting t set up.  Probably won’t be full set up for a couple months.  I’ve got 4 properties so far, to give you an idea too. 

Woah. No love for Xero in this thread huh? I use it at my bookkeeping day job and love it. I like how it's laid out and I can reconcile anytime. I don't like Quickbooks anymore. I didn't like Wave either. I had friends who used it and sometimes you get what you pay for. If you're really small tho, then it's great. I would suggest something else for scaling tho.

@James Yoo You are a beast! That spreadsheet is great! I love the feeling of being organized, don't you? ^_^

I will personally be doing research on @Timmi Ryerson 's suggestion of Smart Property Systems and @Jenny Lalwani 's of OKUPIED (am I saying that right in my head or is it just a silly name?). This is awesome! I love learning about more accounting tools. hehe Thanks tons!

Thank you for asking @Ben Morris and good luck choosing one yourself! Anything really would be better than a shoebox and monthly reconciling these days. Keeping all the contractors and payments together in one place is a fun bonus to just transaction tracking too.

(I'm still new to real estate but not to accounting, and happy there was a subject I could contribute to!)

@Linda Weygant , I report all of my cash. The more my business is worth, the more the bank will lend me against it, the more I can invest. Don't get me wrong, I'm breaking down all of my expenses into categories in google sheets to report to my cpa. That is the task I'm trying to simplify. I'm just tire of manually tracking every dollar I spend. I guess the best thing to do is commit all business spending to one card and omit the cash from anything other than personal.

Thanks to all of you who mentioned your favorite systems. Ill let yall know what I choose.