All Forum Posts by: Max Emory

 Well said, @Jake Baker!

You go, @Ragan Manning!

@Emily Poerio, since you're beginning this journey, beware of the overly complicated entity structures some attorneys say you "must have". 

We see so many different entity structures for rental portfolios in our REI Bookkeeping Firm.

Ensure it's simple enough for you to easily abide by the structure in your day-to-day operations (which your question is getting at).

We've had bookkeeping clients with complicated structures that apparently protected them to the maximum degree but they didn't abide by the structure when conducting transactions in their business daily (lots of unintentional commingling). When this happens the fancy/complicated entity structure is useless protection-wise.

Lots of attorneys out there who will sell you a $10k+ entity structure that doesn't mesh with your operations as you scale your portfolio and team. Most of what they recommend only makes sense from an operational standpoint if you are a larger investor and have a team to help you manage everything.

Also, ensure your REI-savvy tax pro and your REI-savvy attorney link up during the entity structure creation process so things are optimal on all sides.

Just something to keep in mind as you're beginning this journey.

Answering your question, you'll want a checking account (minimum) per subsidiary entity and for your parent entity. Ideally, you'd have a credit card per entity as well but this isn't realistic once you scale past ~10 properties. So, a few credit cards at the parent entity level works better depending how much you plan to scale but this requires more work on the bookkeeping side.

Just ensure you keep things as simple as possible and always think about things from an operational perspective as you grow.

Hey @Brody Veilleux, absolutely, QuickBooks Online and other software that have a "bank feed" feature allow you to connect as many financial accounts as you like and the transactions flow into the software automatically.

We use QuickBooks Online exclusively for all of our REI Clients. I use it for my personal portfolio as well. We've found it has superior reporting features, integration features, and is overall more efficient to work within than other REI-specific software.

The downside is QBO is not set up for REI so you'll need to do that or work with an expert to ensure it is set up for your business appropriately. That's the key component that is usually missing when I hear other entrepreneurs/investors say they don't like QBO.

Something else to keep in mind is your entity structure and how your entities file tax returns. As a general rule, each entity that files a separate tax return (partnership, s-corp, c-corp, etc) will need its own QBO subscription. If entities are disregarded, you can keep up with more than 1 in a single QBO account using the location/business feature to keep track of them separately. This will save you on subscription costs.

For your cash flow management issue, I recommend looking into Profit First. We recommend that system to all of our clients and I use it myself for 3 different businesses. It's super simple and effective.

If you want to discuss any of this further, I'm happy to answer questions and help walk you through it.

Best of luck!

Hey @Scott Gabriel, we're familiar with REI Hub but exclusively use QuickBooks Online for our Clients. If you only use REI Hub as a PM software and QBO as the master accounting software, we could work with it.

If not, I have a large network of REI-savvy bookkeepers. I recommend joining the Facebook Group, "Bookkeepers for Real Estate Investors", and posting what you're looking for in there.

We have no shortage of bookkeepers who are familiar with REI Hub!

Hey @David Cianci, good on you for knowing what commingling is. We encounter a ton of REIs who aren't aware of this so you're ahead of the curve.

Separate accounts for business activities are a must. Even if you don't have an entity and official business accounts in the beginning, you can create separate personal accounts to run your business transactions through and nothing else.

Creating a Paypal account that you only use for business isn't a bad idea. Especially, if you hire a bookkeeper later on this will save both of you a ton of time.

Regarding paying employees and your financial account structure, look into Profit First. I'm a huge fan of this simple cash flow management system. I think it will be helpful to you. We recommend it to all of our REI clients and I use it for my rental business, education business, and bookkeeping firm.

Hope that helps!

 Your head is in the right spot!

 @Karina Busch, no problem at all!

Happy to help.

Hey @Stefanie Bradford, I've heard good things about apartments.com like @Mark Page mentioned. I'm not sure how many total properties you own but rent-ready and buildium are worth checking out as well.

Hey @Karina Busch, there's a great Facebook group called, "Bookkeepers for Real Estate Investors", that is centered around what you need help with. You can go there and ask any and all questions you have.

It sounds like you are leaning towards continuing to run your own bookkeeping which I think makes sense considering you have a few properties and just started.

Bookkeeping for rental properties, especially when rehabs are involved, is more complicated than most people like to believe. So, you're not "wrong" in thinking it's complicated.

The tax code plays heavily into how certain transactions are categorized and there is some flexibility regarding what we can capitalize versus deduct. You can always ask your tax pro if you're unsure.

To give you an idea, I built an extensive flow chart for our bookkeeping team to help decide if something should be capitalized or deducted for a rental property and this became our SOP for capitalizing vs deducting. Again, it's not as simple as you would think it is. Tax strategy plays into it.

With just a few properties, a Google sheet/Excel sheet works just fine. If you prefer a software, we can discuss that.

That being said, if you're interested in hiring an REI-savvy bookkeeper, I'm happy to introduce you to a few candidates so you can interview them.

If you're interested in continuing to be your own bookkeeper, I suggest joining the FB group I mentioned so you can get your questions answered as you're working through your books.

Also, I'm happy to help if/when you have specific questions. Just reach out!