Today we are less real estate focused and more business focused. Over the past couple of months I have briefly mentioned that we started using QuickBooks. While you would think it would be fairly straight forward, there is actually A TON to it, and I was SERIOUSLY confused when I first signed up for it. Now, there are a lot of other bookkeeping applications out there for you to utilize BUT we chose QuickBooks because it’s fairly widely used and accepted, so let’s talk about that.
So, as we do, let’s talk Real Estate, let’s talk GETTING STARTED IN QUICKBOOKS…
From the top!
SET UP YOUR ACCOUNT SETTINGS
Enter in your company name, company address, years in business, EIN, email addresses, industry, etc.
Billing and Subscriptions
Decide which QuickBooks product you are going to use. Currently they have 4 levels online;
Self Employed – These are your self-employed / independent contractors who file a Schedule C.
Simple Start – This is geared towards new businesses that are just starting out – that is us!
Essentials – This level is built for service based businesses who invoice for their time.
Plus – Built for product based businesses who track inventory.
What I found interesting was that one of the tutorials I watched mentioned that you can always upgrade but you cannot downgrade your QuickBooks account level… I need to look more into that – seems flawed and super inconvenient, but I am sure I am missing something there. I have included a little clip from the QuickBooks site so that you can better compare the plans and pricing as they are today.
CONNECT YOUR BANK
Super simple step – just click on Bank and you can easily fill out the form to connect your business accounts and credit cards. Once you are connected, your QuickBooks account will sync with the activity and balance in your bank account for the past 90 days. So hopefully your business is not too much older than that if you are just getting started! If it is, no worries, ours was also quite a bit older than 90 days! You can still transfer everything over, you just have to do so manually (as far as I can tell)! We downloaded our bank statements (prior to those 90 days) and entered in every expense / income item line by line. Literally, I printed each of the statements out and physically crossed out each line item as I entered it into QuickBooks to ensure I did not miss anything. While this has taken me a good amount of time (10+ hours to enter in about 6 months worth of information), it has taught me a great deal about the intricacies behind our business and how we have operated over the past year. I am still not positive it is all correct, but the best part about that is… our accountant now has access to our QuickBooks account and can let us know if we are off somewhere! I find this feature to be BEYOND cool and super helpful!
WHAT DID I DO TO MAKE SURE WE COULD PROPERLY ENTER IN THE MANUAL TRANSACTIONS?
(1) We set up our customers!
I am SUPER into details (for now) and wanted to see how each UNIT was performing. So, I set up each UNIT as a SEPARATE CUSTOMER. This set up allows us to see if a particular unit has more repair issues, if their rent is lower, etc. My hopes is that this will help us better determine how each unit is performing relative to the others so we can make improvements where necessary. The only issue with this is that it can get a bit labor intensive when you are entering in total property renovations. For example, we put a new roof on a triplex in Binghamton recently, and I had to divide the total roof cost by 3 to proportionally allocate the cost across all 3 units. If you have a lot of renovations on the property as a whole, it can be easy to mess these cost allocations up.
FYI, to get started on this part click on the “Invoicing” button on the left hand side of the screen, scroll down to “Customers” and begin entering away!
(2) We set up how we plan to pay others and get paid in return!
In Account Settings you can set the standard for the below categories;
Invoices: Here, you can customize the LOOK of your invoice template from the layout, to the colors, to the text, to the content as well as set up the logistics behind HOW you want to be paid; bank debit, credit card, check, etc. You can also set up details behind the payment structures such as default terms, aka how many days your customer has to pay you before entering into default.
Inventory Tracker: Determine how you went to view and track your inventory.
Expenses: How do we want to view expenses, and purchase orders? This seemed to be the most straight forward part. We have assigned each expenses to a customer (aka a unit) where necessary, and those not linked to a customer are just listed as general business expenses!
Once you have all of your transactions entered in, it is REPORTING TIME! It is time to see just how well your properties are performing. QuickBooks has SO MANY different reporting templates to choose from and if you are looking for something specific, you can go ahead and create a custom report!
Now, I know today may seem super high level and maybe simple, but it’s that time of year, where we are getting ready to close out the books and I want to make sure we have everything in order on our end! I am thinking of trying to take a “QuickBooks for Landlords” online course. What do you all think?! Have YOU taken any QuickBooks courses? My hopes is to put together a super comprehensive guide to use and refer to as we work to grow our business. Is that something you all would be interested in?!