How to record transaction from previous fiscal year that wont be on Quickbook online.

Pladaus · ‎August 30, 2021

We are implementing QBO into our house flipping business. We have been operating for few years now, but I am only adding information for the current fiscal year(2021). Since, I am adding a property that was sold this year but the Rehab work started in 2020. I set my opening balance on the first expense made on this property, which was Sept 1, 2020. Now, I am running into transaction from the previous fiscal year, like a payment from couple houses we sold towards the end of 2020.

I am not sure who to record those transactions. Example, my checking account will have a check for $ 180.000, but I don't think I should record as sales of the property, which is not on quickbooks, or if I should just add as owner investment. Kind of confused here.

Any help, would be appreciated.

.

john-pero · ‎August 31, 2021

Your entries to start this year should have included all balances on all COA and Balance Sheet accounts from your previous accounting program....that being said my hunch is you have in the past been using excel at best and back of napkins in a shoe box at worst.

The income received this year has to be offset by your project costs (which were not deductible expenses in the years incurred for flips but only when property is sold or placed into rental service). Sales price less WIP (Works in Progress) costs equals your taxable gain.

In your example you will receive a 1099 for $180,000 and will need that recorded as income. To avoid paying taxes on all $180k you NOW get to deduct all the expenses of the rehab. If you deducted those erroneously in the prior year tax return I suggest first you seek advice from your tax advisor. I cannot give tax advice but if these dollars were expensed previously then all $180,000 mightg be currently taxable in full.

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john-pero · ‎August 31, 2021

Your entries to start this year should have included all balances on all COA and Balance Sheet accounts from your previous accounting program....that being said my hunch is you have in the past been using excel at best and back of napkins in a shoe box at worst.

The income received this year has to be offset by your project costs (which were not deductible expenses in the years incurred for flips but only when property is sold or placed into rental service). Sales price less WIP (Works in Progress) costs equals your taxable gain.

In your example you will receive a 1099 for $180,000 and will need that recorded as income. To avoid paying taxes on all $180k you NOW get to deduct all the expenses of the rehab. If you deducted those erroneously in the prior year tax return I suggest first you seek advice from your tax advisor. I cannot give tax advice but if these dollars were expensed previously then all $180,000 mightg be currently taxable in full.

Pladaus · ‎September 01, 2021

@john-pero Thank you so much to reply my post.

Very helpful the way you put it, how my fiscal year should start. Made me rethink how I am doing things, clearly I am doing wrong.

Yes, we have been using excel with lack of information on how to keep our books.

I thought I should start when my first expense was made to each property and then at the end of each project in 2021 I would make AJE transferring from COGS to Assets and everything would be in 2021 Fiscal year.

I like to do things myself while I learn, perhaps I should seek help with my accountant to setup QBO.

One Again thanks for your help.

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How to record transaction from previous fiscal year that wont be on Quickbook online.