How to manage expenses across multiple properties, LLCs, partnerships, etc.
Developer · Member since 2023 · 73 posts · 43 votes
How to manage expenses across multiple properties, LLCs, partnerships, etc.
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Simon W.Business Member
Real Estate Consultant · Lehigh Valley PA & New York City · Member since 2013 · 1k+ posts · 695 votesWhat software do you use for your accounting system?
No matter what you do, there will be a good amount of manual work since it is multiple LLCs.
Best way to go about doing this is having the PO# tie to a property and/or the name of the LLC.
12 Replies
- Member since 2023 · 43 posts · 28 votes2y
Quote from @Matthew Banks:
Hi, we manage properties in a partnership and in a couple LLCs. We have Lowes and other accounts to purchase materials for repairs or renovations. Those expense accounts need to be paid with funds from the corresponding property and its bank account. Does anyone have a method or process that helps make this easy and quick to manage? We have a single Lowes Biz Pro credit account, for example. Do you group paper receipts into folders for each property/entity and then pay bills once a month, for example? Is there an easier, more automated process?
Thanks!
One efficient way to manage expenses for multiple properties and entities is to utilize accounting software that allows you to track expenses by property or entity. This way, you can easily allocate expenses to the appropriate property when making purchases with your Lowes account or other accounts.
You can also create separate folders or digital files for each property/entity to keep track of receipts and invoices. This will make it easier to reconcile expenses and ensure that each property is being properly funded.
Automating the payment process can also streamline the process. Setting up automatic payments for recurring expenses or using online bill pay services can help ensure that bills are paid on time and reduce the risk of missing payments.
Overall, the key is to establish a consistent process for tracking and managing expenses for each property/entity to effectively manage your funds and ensure that expenses are properly allocated. - Developer · Member since 2023 · 73 posts · 43 votes2y
If we have a Lowes business pro account, and in Month 1 we buy $1000 of materials for properties in 3 different LLCs, it sounds like manual effort is needed both to pay off the $1000 balance by making payments from each LLC's bank account for the amount it owes, and then a separate manual effort to record and assign the expense transactions in the bookkeeping software. Any way to eliminate one or more of these manual steps? We can't setup auto-pay because that wouldn't be able to withdrawl the correct amounts from each LLC bank account. Bookkeeping software would likely note that a transaction took place, and maybe it would be able to categorize it correctly, but maybe not.
- 2ySimon W.Business MemberReal Estate Consultant · Lehigh Valley PA & New York City · Member since 2013 · 1k+ posts · 695 votes
What software do you use for your accounting system?
No matter what you do, there will be a good amount of manual work since it is multiple LLCs.
Best way to go about doing this is having the PO# tie to a property and/or the name of the LLC.
- Accountant · Indianapolis, IN · Member since 2019 · 247 posts · 135 votes2y
I agree with Simon. My clients assign PO# to tie to a property and it has really helped out.
- 2yJake BakerBusiness MemberFlipper/Rehabber · San Diego, CA · Member since 2020 · 1k+ posts · 696 votes
Each LLC should have its own business accounts.
I use QuickBooks Online for all of my clients. For most real estate investors, a Plus subscription is needed so you can organize by property.
BookkeepingRE - Bookkeeping for Real Estate & Service-Based Businesses52 Reviews - Developer · Member since 2023 · 73 posts · 43 votes2y
Quote from @Jake Baker:
Each LLC should have its own business accounts.
I use QuickBooks Online for all of my clients. For most real estate investors, a Plus subscription is needed so you can organize by property.
Everyone recommends Quickbooks, yet it is not a one-size-fits-all solution esp. when its annual price can be $1000+. For very small businesses with just a couple properties, this isn't affordable. There are other solutions out there and I'd like to emphasize that people shouldn't jump to paying for a bookkeeping service that might cost 3% or more of their gross revenue.
There is Quicken for business and Waves accounting, and likely many other software programs. Accountants and larger property owners leap to Quickbooks because that is the preferred program that accountants know and use, and accountants I know generally prefer to avoid having to work with multiple accounting software suites, which is understandable, though a disservice to small firms.
While a business owner's job is primarily to focus on revenue, you also have to make a basic effort to control expenses and keep things from eating up 1,2,3,4% or more of gross income. People say to hire a bookkeeper when you can afford it, and that implies you should also only pay for an expensive accounting suite when you can afford it. - Real Estate Consultant · Reston, VA · Member since 2022 · 513 posts · 522 votes2y
A good bookkeeping software will help make the process easier. I use and highly recommend Baselane for this task. Each partnership / LLC that you own can have a separate account with one singular login. From there, you can set up a virtual account for each property that can also have a virtual card attached to it. This helps when ordering supplies for a specific property because you can use the virtual card attached to the account which will automatically tag the transaction for that specific property. Then, for bookkeeping purposes, all you would have to do is upload the receipt and categorize the transaction as supplies, repairs, etc. My virtual assistant saves down all of my receipts in the "Date - Amount - Expense Type" format in a folder for each property so we can easily identify which receipt is for which expense.
- Accountant · Mobile Al · Member since 2019 · 33 posts · 20 votes2y
Great question, Matthew. Quickbooks Online is very affordable. I'm not sure where you got your information but it's not into the thousands. One QB Plus subscription will cost you about $65/mo. And 3% bookkeeping fee? Who have you been talking too? LOL!! That's not always feasible to a small business, I have to agree. But there are accoutning firms out there that charge a fair price and one that won't kill the bank. Something you might want to consider is what is it going to cost you in the long run if you're doing your own books? An accountant knows and follows the laws and standards and can help you maximize your profits and save your thousands. Way more that what you might spend on a monthly basis. All you have to do is budget that bookkeeping and subscription expense. I do have to disagree with you on the one size fits all. I have clients that gross well into the tens of millions, they hold residential and commercial properties. QB has never been an issue. You just have to know how to use it.
When you purchase something at Lowe's, the cashier usually asks if there is a PO. If they don't, you can tell them and it will print out on your receipt. The PO should be the property address. Then when you email that receipt into your QB account, you or your bookkeeper will see the printed receipt with the PO and can categorize that expense to the right property. Any other receipt? You can simply write the property address on it then take a photo and upload to your Quickbooks account. Any digital receipts can be emailed right into Quickbooks.
I have heard of Baselane and actually have met with one of the owners and developers. I haven't used it yet but from what they've shown me, it looks real promising and maybe worth the time trying out.
There are many receipt bank type softwares available. I can't suggest one b/c I don't have any good experiences with them. You may find one that suits you if you keep looking. I would certainly schedule the same time every month to take care of your finances. Make it a discipline if you haven't already. You'll soon find out what works for you and what doesn't. All the best!
- Developer · Member since 2023 · 73 posts · 43 votes2y
Quote from @Dee Dee Huey:
Great question, Matthew. Quickbooks Online is very affordable. I'm not sure where you got your information but it's not into the thousands. One QB Plus subscription will cost you about $65/mo. And 3% bookkeeping fee? Who have you been talking too?
Thanks for the info in your post, but if someone has just 1-4 properties and they generate cash flow after expenses of only $500 or so/month, that is $24k/year in cash flow. Quickbooks pro is $1080/year, which means on just accounting software alone, someone is paying out 4% of their cash flow, not including the tax accountant or the bookkeeper's costs. To me that is not proportionate and accountants need to be sensitive to that with their small business/real estate clients and not recommend a one-size-fits-all solution. Every accountant I hear from says use Quickbooks, and that's a shame.
That's why I'm looking at Baselane now (which is free), and possibley Quicken for Biz & Personal (which is $6/mo). - Developer · Member since 2023 · 73 posts · 43 votes2y
Quote from @Jamie Banks:
A good bookkeeping software will help make the process easier. I use and highly recommend Baselane for this task. Each partnership / LLC that you own can have a separate account with one singular login. From there, you can set up a virtual account for each property that can also have a virtual card attached to it. This helps when ordering supplies for a specific property because you can use the virtual card attached to the account which will automatically tag the transaction for that specific property. Then, for bookkeeping purposes, all you would have to do is upload the receipt and categorize the transaction as supplies, repairs, etc. My virtual assistant saves down all of my receipts in the "Date - Amount - Expense Type" format in a folder for each property so we can easily identify which receipt is for which expense.
Hey Jamie, good suggestion!! We're trying it now and so far, so good!
- Member since 2022 · 29 posts · 19 votes5mo
Quote from @Matthew Banks:
Quote from @Jamie Banks:
A good bookkeeping software will help make the process easier. I use and highly recommend Baselane for this task. Each partnership / LLC that you own can have a separate account with one singular login. From there, you can set up a virtual account for each property that can also have a virtual card attached to it. This helps when ordering supplies for a specific property because you can use the virtual card attached to the account which will automatically tag the transaction for that specific property. Then, for bookkeeping purposes, all you would have to do is upload the receipt and categorize the transaction as supplies, repairs, etc. My virtual assistant saves down all of my receipts in the "Date - Amount - Expense Type" format in a folder for each property so we can easily identify which receipt is for which expense.
Hey Jamie, good suggestion!! We're trying it now and so far, so good!
Matt, Are you still using Baselane? Find something better? I am in a very similar situation as you
- Real Estate Consultant · Reston, VA · Member since 2022 · 513 posts · 522 votes2y
Glad to hear that it's working for you! I have different LLCs and partnerships too and it can be a hassle if things aren't organized correctly @Matthew Banks
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