What will a good bookkeeper take off my hands?

Question

Financing my first flip with a solid GC project managing start to finish. While I have the time to manage the backend accounting and organization of paperwork, what will a good bookkeeper take off my hands? I'd rather not file hours of paperwork if I don't have to.

Aaron McGinnis · Answer

At a minimum a book-keeping/accounting service should handle -

* System set-up (Quickbooks is a fine solution for most)

* Data entry/general journal log keeping

* Month-end reconciliation

* Quarterly report

* Quarterly tax filing (Payroll, etc.)

* Yearly tax returns

A full service accountant should also handle -

* Accounts payable

* Accounts receivable

* Weekly/biweekly reporting

* Project reporting

One of the biggest regrets I have is not having gotten a good book keeper earlier in my business. I'm of the opinion that doing the daily data entry is not something a business owner really needs to be doing; it's too easily outsourced as job.

Also, as the business grows doing the monthly reconciliations becomes an unbelievable burden, and doing year-end taxes is the stuff of nightmares.

Simon W. · Answer

I am in agreement with Aaron. As an accountant, I do not get why business owners/investors focus so much on the bookkeeping when their expertise is on investing.

My typical month-end things I do as an accountant:

Bank RecsAnalyze the GL (reclass, if necessary)Make sure Mortgage, Utilities, and Property Taxes are paidCredit Card ReconciliationsReview Income & Expense statementReview Cash balance (this is mostly every time checks are cut) to make sure there's enough for mortgageYear-end:Gathering all backup and documents for the tax accountant or auditorThis includes GL should be close to perfect.Review of Income Statements and Balance SheetsFiscal Year-end bank rec which should match the balance sheet's numbersPrepare 1099sPrepare any CAM reimbursements (commercial tenants properties)As for flipping - same concept, just making sure that the closing entries are done correctly.

Gita Faust · Answer

Anywhere from $75/ month to $10000000 Just kidding or Anywhere from $15 an hour to $.....

It all depends on a person, team's expertise and knowledge.

From our experience because of tardiness in financials they do not file tax returns in time, not sure where they are spending money, what is the ROI, what each lead, property is costing them. Lastly where they stand on each property. It is all in the head.

For eg. You invest 50K in your business and get a loan for 200K to invest in anything in your business and you spend it on marketing, research, purchasing property.....

If you purchased a property for 100K and took 75,000 (from 250K) at closing or fix it, put 20% down and balance from TD Bank as mortgage.

• What is your liability on that specific property?
• What is your liability on the business minus the property?
• What is your equity on that specific property?
• What is your equity on the business minus the property?

This is bookkeeping and going beyond. You already know how to wheel and deal and are learning to invest in real estate.

But no one - no one that I have seen so far is saying, you need to learn to first keep your financials for your business and each property. Please correct me if I am wrong.

How to get started even if you do not have one property?

Simple - start with your personal daily spending and you have your financials. PL and BS.

Sorry if this is toooo long.

Gita Faust · Answer

There is a difference between bookkeeping at this intervals:

- daily

- weekly

- monthly

- quarterly

- year end

Define your needs and the end goal is not data entry. It is getting those analytic reports at your fingertips and someone making you accountable so bookkeepers like us can achieve your goals.

Aaron McGinnis · Answer

If you intend to do this more than once, I would at the very least advise getting a professional to help set up Quickbooks for you and show you how to run the program correctly. Start building a system right away so that you can hand it off to someone else a little ways down the road.

I would also advise having a book keeper do your month-end reconciliation and year-end taxes right off the bat, even if you do the day-to-day entry by yourself. It's very easy to get off track and not know it until you're hundreds of transactions down the road... then you have to pay out the nose for someone to go back and forensically audit your bad habits, fix it, and move forward from there.

Joe Splitrock · Answer

@Harry Williams if you have a good software system setup, all you are doing is logging expenses, paying bills and filing receipts. Filing is as simple as putting new ones in front of the folder. As part of managing the project, you need to track expenses. I am not sure outsourcing expense management is a good idea on your first flip.

I am guessing this task will take 15 minutes per day, but if you feel that is too much, most accountants offer bookkeeping services. Just contact your CPA if you need help with it.

Ben Day · Answer

@Tom Conant Great question!

Bookkeepers tend to charge for services in two different ways.

1) Hourly: usually at or around $20-50 an hour, but this number can vary wildly depending on the level of service you're getting. And I definitely mean level of service. Someone brand new and to bookkeeping may charge very little, and a well seasoned RE CPA may charge the usual CPA rate of $100-400 an hour.

2) Flat Rate: This charge should stay the same for the most part as time goes on with your bookkeeper. Sometimes it will also include the tools you and the bookkeeper need in order to work together, like Quickbooks. The best part about paying a flat rate is that there's no extra trust needed: the bookkeeper does the work for the price, and you get your books. With hourly pricing, there's always that nagging feeling of "what if my bookkeeper is just letting the clock run? How are they measuring their hours to begin with?"The best way to get this number is to reach out to a bookkeeper and ask. But, you can always guesstimate by counting your own hours doing it, and then doing the math for hourly.

Simon W. · Answer

Those are just some of the things I do. I haven't even listed the day-to-day tasks.

What will a good bookkeeper take off my hands?

Most Popular Reply