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All Forum Posts by: Dan V.

Dan V. has started 27 posts and replied 304 times.

Post: Newbie form 1099 contractor question--cash or credit?

Dan V.Posted
  • Investor
  • Norfolk, VA
  • Posts 310
  • Votes 187

@Nathan G. If you have somebody handling your books, ask if they offer 1099 filing (usually they do) since bookkeeping usually handle the majority of work so it should cause you just a little extra. In my experience, the challenging part is gathering the tax info from the vendors so it's a good practice to make W-9 a standard requirement for all your contractor. 

Software like QBO offers 1099 filing, so once you check the box in the vendor setup to track 1099 payments and enter the tax info, filing should be easier. Depending on the number of contractors, the filing fee usually ranges from $1-$5 per form plus the labor hours.

Post: Should I pay off my property

Dan V.Posted
  • Investor
  • Norfolk, VA
  • Posts 310
  • Votes 187

@Alexander Churchill Disclaimer: I'm not a lawyer! A mortgage can provide asset protection too, making your property a lesser target of a lawsuit. As others suggested, you might want to look for alternative use of your money. 

@Jon S. If you have online account to access your HD account, you can use that to connect it to QBO. I see multiple options to for Home Depot so I think you should be able to. 

If you cannot connect your Home Depot account in QBO, you can use the exported excel file, save it as CSV then import it in QBO. The details can be mapped as the description so you have the details once you drill down the report. 

So the way it will work, you will setup the Home Depot as a credit card in the chart of accounts, connect to online banking, map to that account then enter transactions like you enter the bank transactions. You can also enter "split" transactions in case you need to split a singe purchase into multiple categories/properties. The payment to Home Depot will then be captured as a transfer (in the bank register, enter the payment as transfer to Home Depot credit card account you just created). 

@Jon S. I would recommend doing a formal accounting of your transactions and since you said you already have Quickbooks, go ahead and connect your bank and cc in QB and do your accounting directly there, you're doing the work anyway. It's like hitting 2 birds in one stone, you will have you report for the lender and you have your accounting done for tax or analysis purposes. You just have to make sure you set it up that it will breakdown the costs based on the lender requirements (ie. HVAC, electrical, plumbing, roof, materials etc.). Good luck and hope you'll cross the finish line soon. 

Post: Bank Setup for Rental Properties

Dan V.Posted
  • Investor
  • Norfolk, VA
  • Posts 310
  • Votes 187

@Kirsten Braddock  It's a matter of preference and also depends on your set up. 

If you are not planning to use a software to track income/expenses by property, having a separate bank account for each property might work best for you. Also, required if each property is under separate LLC.

If all properties are under the same owner and you are planning to use accounting software to track transactions by property, then one checking account is sufficient. The benefit of having a software is that you can always go back at your historical data in case you wanted to do some analysis on your business. 

Having a separate reserve bank account is also good practice (but not necessary) since it will give you a better idea on how much fund is readily available for reinvesting or withdrawal. 

Post: Good system to track net worth and loan summaries?

Dan V.Posted
  • Investor
  • Norfolk, VA
  • Posts 310
  • Votes 187

Agree on Quickbooks, if it's set up right, it's a powerful tool in tracking your financials. 

Loan amortization can be created in excel by using the template (under Financial Management). 

Post: Accounting for Vacancy and Repairs

Dan V.Posted
  • Investor
  • Norfolk, VA
  • Posts 310
  • Votes 187
Originally posted by @Brian H.:

Bump to try and get a more clear answer to the last post above mine.

When people are setting aside say (THESE ARE HYPOTHETICAL):

10% for CapEx

5% for Repairs and Maintenance

5% for Vacancy

Do you create a savings account for each of these? 

Or just put it all in one savings account and then just split it up in QuickBooks so you know what is what? 

Or can it all just stay in the business checking and then just be organized in QuickBooks per reserve accounts created in the Chart of Accounts? 

I am just getting started with QuickBooks for my new rentals and this piece is confusing me quite a bit.  

Even more confused as to how we can not have that count as income... it went through my QuickBooks system as payments that were then received and deposited and now have been recorded in my "Rents Received" income account... 

Should I be doing something to splice off pieces for Cap Ex, Maintenance, Vacancy before doing all that?

 Having a separate savings account will be much easier since you will not have to use your imagination to track your reserves. To set it up in QB, I would create sub-accounts of your savings account and enter the corresponding transactions at sub-account level, any interest at main level and reconcile at main level. Your Chart of account will look like below:

Savings Account

Capex Reserve

R&M Reserve

Vacancy Reserve

For simplicity, say you have $100 as your basis of allocation, then you will transfer the actual fund from your checking to your savings reserve a total of $20 ($10 Capex, $5 R&M, $5 Vacancy) then record it QB as follows:

Account                                      Debit             Credit

Savings:Capex Reserve $10

Savings:R&M Reserve               $5

Savings:Vacancy Reserve         $5

Checking Account                                             $20

And say you transferred $10 fund from savings to checking to cover actual expenses Capex $5, R&M $2 & Vacancy $3, then you will book it as follows:

Account                                             Debit            Credit

Checking Account                           $10

Savings:Capex Reserve                                        $5

Savings:R&M Reserve                                           $2

Savings:Vacancy Reserve                                     $3

Your savings/reserve account will then has a balance of $10 broken down as follows:

Savings Account                  $10

Capex Reserve $5

R&M Reserve                   $3

Vacancy Reserve             $2

I also suggest that you this when you have enough funds to cover your reserves. Hope this helps!

Post: Xero or Quickbooks Online

Dan V.Posted
  • Investor
  • Norfolk, VA
  • Posts 310
  • Votes 187

If you are planning to use the help of an accountant, ask for recommendation from him/her as he/she will most likely recommend something that he/she is familiar with and should be able to help you on the setup and guide you on the process. Both will work however, that also depends on your accountant's familiarity with the software.

I am a QBO Pro advisor so I always use and recommend QBO, of course, I am biased. 

Post: Accounting software for Rentals

Dan V.Posted
  • Investor
  • Norfolk, VA
  • Posts 310
  • Votes 187

If books and accounting are done correctly, you can start from your profit & loss (cash basis) then add back any non-cash expenses such as depreciation and amortization, then deduct payments affecting balance sheet account like payments for capital expenditures and/or mortgage principal. 

Post: Bookkeeping Advice for Landlords

Dan V.Posted
  • Investor
  • Norfolk, VA
  • Posts 310
  • Votes 187
Originally posted by @Jeremy Blackman:

@Dan V. This is a bit confusing

Below are the screen shots. So I setup the property as Customer and the units as sub-customers. And I also created Class for each property and sub-class for the units. 

Of course, there's more to it when setting up the books like setting up chart of accounts, products & services, and opening balances.