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Level 1

Parnership House Flipping?

I'm in a parternship with one other member. We started flipping houses last year and will do 3 or 4 this year. With each property our equity is different (60/40). Due to this, I would like to be able to track our expenses by property. So that when we purchase materials with a credit card, we can assign it to a certain property. When we sell the property we can total our expenses and know how much equity each partner has on the property.

 

How can I achieve this and what is the best product for my situation.

 

We do not need many of the QB features like creating invoices, credit card payments, payroll etc.

Solved
Best answer 04-12-2018

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Highlighted
Anonymous
Not applicable

Parnership House Flipping?

Hey Alc (@alc1)

 

Welcome to the QB Community. Sounds like a fun partnership, I have a few friends in the area who do the same. How many projects have you finished thus far?

 

First, are you using this purely to track expenses, or do you also want to produce documents for tax purposes and compliance?

 

If you just need an easy way to track expenses, the basic QuickBooks Online product is a fine choice. You can create parent and "sub" accounts to track expenses by categories/locations and then sync your CCs. You can also include existing equity if you want to track how much you've invested in the project. I would only recommend this option if you want to track basic numbers. I wouldn't recommend the QuickBooks Self-Employed edition because it's more difficult to custom track expenses. 

 

If you need to eventually include expenses like 1099 contractor work (as well as the ability to pay contractors) and reports to send to your accountants, you'd need to upgrade to one of the more feature-rich versions. There are also very specific methods you'd need to follow while recording your expenses and equity so that your accounts are accurate, compliant, and subtable to send to an accountant and eventually the IRS.

 

Since you plan to grow the project over 4 years, I'd recommend thinking ahead on what you will eventually need or want to track. Let that guide your decision. 

 

View solution in original post

5 Comments
Highlighted
Anonymous
Not applicable

Parnership House Flipping?

Hey Alc (@alc1)

 

Welcome to the QB Community. Sounds like a fun partnership, I have a few friends in the area who do the same. How many projects have you finished thus far?

 

First, are you using this purely to track expenses, or do you also want to produce documents for tax purposes and compliance?

 

If you just need an easy way to track expenses, the basic QuickBooks Online product is a fine choice. You can create parent and "sub" accounts to track expenses by categories/locations and then sync your CCs. You can also include existing equity if you want to track how much you've invested in the project. I would only recommend this option if you want to track basic numbers. I wouldn't recommend the QuickBooks Self-Employed edition because it's more difficult to custom track expenses. 

 

If you need to eventually include expenses like 1099 contractor work (as well as the ability to pay contractors) and reports to send to your accountants, you'd need to upgrade to one of the more feature-rich versions. There are also very specific methods you'd need to follow while recording your expenses and equity so that your accounts are accurate, compliant, and subtable to send to an accountant and eventually the IRS.

 

Since you plan to grow the project over 4 years, I'd recommend thinking ahead on what you will eventually need or want to track. Let that guide your decision. 

 

View solution in original post

Highlighted
Level 15

Parnership House Flipping?

@alc1

 

Did you form an actual partnership? Partnership agreement, registered with the state, etc?


If so that is not how a partnership works, equity by project I mean, and I assume you also mean profit split by the same ratio.

Highlighted
Level 1

Parnership House Flipping?

It's an LLC taxed as a partnership.

Highlighted
Level 15

Parnership House Flipping?

@alc1

 

Then concept you proposed, as I understand what you said, can not be done if your intent is to pay profit proportionately.


A partnership conducts business, it has expenses and it makes income as a business. Partners during the year can take money out of the partnership using partner equity drawing.


The partnership agreement states the % of net income and/or loss shared between the partners, per partner in other words.


At year end the partnership fills out IRS form 1065. That form 1065 generates a form K-1 for each partner with his share of the partnership expenses and income based upon the partnership distribution agreement.  and that K-1 is part of his personal form 1040 calculations


For a company taxed as a sole proprietor (schedule C) or partnership (form 1065), I recommend you have the following for owner/partner equity accounts (one set for each partner if a partnership)
[name] Equity (do not post to this account it is a summing account)
>> Equity
>> Equity Drawing - you record value you take from the business here
>> Equity Investment - record value you put into the business here

 

So as you pay expenses for the business from personal funds (or just make a deposit into the business bank which is the best way to insure your LLC is upheld in a court if that ever happens), that would be partner equity investment

Highlighted
Level 1

Parnership House Flipping?

This response did not answer his initial question at all.  He is asking how to track expenses for each project.  This would be similar to a job cost report in other software.

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