How do I set up a Rental LLC?
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Welcome to the community! Can you provide a little more detail about your rental LLC? Is it a property management company? Or are you doing equipment rentals? Car rentals?
QuickBooks wrote a guide for setting up property management companies, though without further details, I can't be sure this is the resource you need.
Sounds like an exciting gig!
Interesting article you suggested. I have been using Quicken rental property manager, but I could not convert to quick books. My accountant does not us quicken so I have to relay tax data to him with paper reports. I only have 4 properties that I own and manage. Do I really need to set up two LLC"s? Quicken did a great job but accountants are not up to speed with it. Any thoughts?
Glad to hear you're still enjoying Quicken, I haven't used it in a while but I enjoyed watching my folks use it.
There are some ways to convert Quicken to QBO, here's an article to get you started. My bigger question, though, is how much functionality do you want or need from your accounting, independent of your accountant?
THANK YOU AGAIN!
I have basic accounting skills, but I try to keep accounting cost down by supplying my accountant with comprehensive bookeeping data to them via QBS. I owned and operated a small electrical contracting company INC, for 30 years. No secretary 6 to 12 employees.
I used QBs for that, when I retired I went to quicken because of the rental management program. I also use that program for my personal books and investing.
Awesome that you're taking control of your accounting destiny! Your current transfer plan makes a lot of sense, really glad you found a method that works for you - all while running a sizable team. Any issues with the data transfer in the past?
So you looking to use your Quicken-to-QB platform for rental management? We've actually had qutie a few conversations on the community about property management, must be the season.
Just a thought though, it might be a good idea to keep everything seperate - different data sets, different programs, no confusion.
Even though you're retired, do you still do any machining/electrical work? I used to build electro-magnets on folders when I was a kid...
I have several clients that use QB desktop to manage rental properties. The best way seems to be to set up a separate "class" for each property. Makes tracking by property easy.
Some other clients use a rental property specific software. In the end it works almost exactly the same way, but I don't know how easy it is to use, so I cannot comment on that.
Using the QB class feature is very easy and straightforward.
Hope this helps.
Mark Wagner CPA
We own several residential rentals titled in three different LPs and managed by an LLC. I've used Quicken Rental Property Management almost from the 2nd or 3rd year that it's been available. I'm learning that more and more CPAs are set up for tax returns using Quickbooks not QRPM. I'm looking into movinig to Quicken but it seems like a very difficult transition without the advantages of QRPM.
Just wondering if anyone else has faced this issue.
Thanks so much for your reply. My CPA always did it the way you mentioned. But evidently the new one really only handles, or knows how to handle, accounts on Quickbooks. I am concerned that more and more CPA s will be taking the easy way out. But just don't think I'm up to making the changes required to go to Quickbooks. Anyway, thanks again. Where are you located?
Any desktop version should work. The main feature you need to keep separate records by property is the "class" feature. If it has that, you're good to go.
I detest QB online and refuse to work with it.
It is slow. You cannot run a report, then doubleclick to the underlying transaction and go back to the report. Instead you have to "reload" the report every time. Several of the features don't work the same or as well as the desktop version. It is slow. The speed of reload makes tasks like check entry easily take 4 times as long as doing it on desktop. Did I mention that it's slow?
Furthermore, it is a monthly subscription, which is no doubt why Quickbooks pushes it so hard. Because the desktop software can be purchased once and used for up to three years with no additional cost, desktop is less expensive for the client.
Further, when your data lives on the "cloud" you no longer have control. Who's servers is the data stored on? What is their backup process? What happens if the data center owner goes broke and shuts down? What is their security setup for my and my employees' personal information? What if my internet goes out on payday? With desktop I control my data. I can copy it to a portable format and move it somewhere else that has electricity or internet, with little interruption. I back it up, and I know my security.
I have nothing good to recommend QB online. I fear that the development plan for Intuit is to discontinue the desktop versions in favor of the monthly recurring revenue stream of the online version. This is when I will convert to another software and they will lose my business forever. But I digress...
I have had exactly three clients who used QB online. Two have converted to desktop; the third went out of business. I will refuse to work with any potential client who insists on continuing to use the online version.
Thanks for the clarification. I work with both versions and prefer Desktop for the most part. Since I am not 100% sure of your particular team's needs, just wanted to throw out all the options!
@mcwagner good digression, I appreciate your candor.
My thought for @TRentals and @Granma was that QuickBooks Online may more suitable for certain industries (someone offering services with minimal inventory, for instance) who may not need the depth of QuickBooks Desktop. I'm a bit of a fanboy making this comparison (used to work for them), but I often compare QBO/QBDT to Adobe Lightroom/Photoshop. Photoshop can do everything Lightroom can and more, but the software is overkill for basic needs and can be especially overwhelming for new users. A tool is only good if you use it.
You bring up valid points about the limits of the cloud. Depending on many factors, internet-based software can run slow (too many to list). In regards to the subscription model, but could argue there are benefits to having software that is constantly updated, and supported by an app ecosystem that is always rolling out new features. There's always the potential for changes and improvements. I remember back when I was a kid before the net - if I had problems with a program and needed a patch...
Then again, to play against myself, I prefer the buy-it-once model because I don't need to collaborate with others, access my work from multiple locations or feel the need to have the latest version.
I actually think you bring up some good points with cloud storage. I've had a Chromebook for several years. In addition to cloud storage, I always keep a physical copy of my files on a removable hard drive which I update every few weeks. Twice a month, I pull my "documents" over into the removable hard drive, keep the last 3 versions, and delete the rest. 99.9999% there's never an issue, but I still feel better keeping redundant copies. I've done this since the early 2000s, back when harddrives failed often and you never knew when you might lose everything. Redundancy keeps data safe!
I've talked to a few of the product managers here on campus and suggested there be an easy process to backup cloud files to local hard drives (a QBB for QBO). No word yet, but I am going to keep pushing :).
@mcwagner, I am glad you and your clients enjoy QuickBooks Desktop and I encourage you to stick by your approach - work with the people/products you find most worthwhile.
@mcwagner I was wondering if I could see a sample of the chart of accounts you mentioned. I am in the process of setting this up for an LLC with a rental property. Thanks in advance for the help.
Here is your Christmas present.
Your COA as far as income and expense should mirror your tax return. In this case for US it is Schedule E. Those are the only I/E accounts you need. You can add sub accounts if you wish, to track electricity and water as subs of utilities or split income if any tenants are subsidized.
Additionally each property by deed is a Fixed Asset and for an LLC you need 3 equity accounts per member: equity, draw, contributions with the three bundled as child accounts of a parent non posted to summing Equity account. And of course you need bank accounts for operations and for security deposits in escrow.
As far as recording income each tenant is a sub customer of the unit, which is a sub customer of the building , which is a sub customer of the property by deed upon which each column of the schedule E corresponds to, and for which you created a class.
Create memorized invoices to record rent due, preferably 5-10 days before due so you can issue statements.
Can Intuit set up QuickBooks like its Rental Quicken Manager? After all it could just be a shell over the existing QuickBooks tab but also have more info available, like when leases expire, automatic rent increases per the lease, etc..