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[ Follow Ups ] [ Post Followup ] [ The Forum Board ] [ FAQ ] Re: Company books w/trusts Posted by Rick Harmon on December 18, 2003 at 8:16 AM In Reply to: Company books w/trusts posted by Erick on December 17, 2003 at 7:40 PM : Me and my partners operate an LLC which owns a number of buy and hold type properties. We're just starting to put our properties into trusts and just starting to do some subject to's. However, I'm getting a little held up b/c I can't figure out how we'll organize the books. By the way, the beneficiary of the trusts will be our LLC while the trustee will be one of the partner's wives. : Right now, we have all our books on Quickbooks with a single bank account for the LLC. However, when we put the properties into trusts (either the properties we already own or freshly purchased ones) how should the eventual rental income and expenses be organized? Who they come from and go to? : Also, when making mortgage payments or receiving proceeds from a property sale, won't these checks need to be made out by (and to respectively) the trustee? So, do you somehow have trust bank accounts set up for these transactions or would you have the LLC as property manager handle all of the transactions through it's account? : I'm probably making this harder than it needs to be... : Thank you. ========================================= Erick- Since I think you've posted this message twice now you must be a bit anxious for an answer. That answer is: You're "in the business" now so spend the money and hire a CPA with real estate experience (they're plentiful in LA) to set up your books to reflect the way you want to use them. Begin by determining whose money (capital) and equity needs to be separated, then go on to what info is most important to you in your reports. For my business, I set up a separate "venture" main account for each property I attempt to acquire. It's easy. If the venture goes forward, I set up several other accounts to reflect acquisition costs, fix-up and holding costs, taxes, and total equity and each partner's equity. Money spent on a deal that doesn't go thru just gets expensed and adjusted later. Since Equity is always an estimate until realized (sold) that gets adjusted at year end by the CPA. To do this right your gonna spend some good money. OR, you can do it on the cheap and subject yourself and you partners to disagreements and the possiblility of breach of fiduciary duty if funds are inadvertantly misposted, mischaracterized or otherwise reflected erroneously. I'm definately NOT an accouting guy (although the guy who told me to buy property was my college accounting professor). If you want to do this thing right, set a couple of thousand bucks aside and be prepared to get it right the first time. THen, when you need additional capital you won't having reservations about accepting investors who like to see the books closely. Rick Follow Ups: Post a Followup: Name : E-Mail : Subject : Comments: : : Me and my partners operate an LLC which owns a number of buy and hold type properties. We're just starting to put our properties into trusts and just starting to do some subject to's. However, I'm getting a little held up b/c I can't figure out how we'll organize the books. By the way, the beneficiary of the trusts will be our LLC while the trustee will be one of the partner's wives. : : Right now, we have all our books on Quickbooks with a single bank account for the LLC. However, when we put the properties into trusts (either the properties we already own or freshly purchased ones) how should the eventual rental income and expenses be organized? Who they come from and go to? : : Also, when making mortgage payments or receiving proceeds from a property sale, won't these checks need to be made out by (and to respectively) the trustee? So, do you somehow have trust bank accounts set up for these transactions or would you have the LLC as property manager handle all of the transactions through it's account? : : I'm probably making this harder than it needs to be... : : Thank you. : ========================================= : Erick- : Since I think you've posted this message twice now you must be a bit anxious for an answer. : That answer is: You're "in the business" now so spend the money and hire a CPA with real estate experience (they're plentiful in LA) to set up your books to reflect the way you want to use them. : Begin by determining whose money (capital) and equity needs to be separated, then go on to what info is most important to you in your reports. : For my business, I set up a separate "venture" main account for each property I attempt to acquire. It's easy. If the venture goes forward, I set up several other accounts to reflect acquisition costs, fix-up and holding costs, taxes, and total equity and each partner's equity. Money spent on a deal that doesn't go thru just gets expensed and adjusted later. Since Equity is always an estimate until realized (sold) that gets adjusted at year end by the CPA. : To do this right your gonna spend some good money. OR, you can do it on the cheap and subject yourself and you partners to disagreements and the possiblility of breach of fiduciary duty if funds are inadvertantly misposted, mischaracterized or otherwise reflected erroneously. : I'm definately NOT an accouting guy (although the guy who told me to buy property was my college accounting professor). If you want to do this thing right, set a couple of thousand bucks aside and be prepared to get it right the first time. THen, when you need additional capital you won't having reservations about accepting investors who like to see the books closely. : Rick Optional Link URL: Link Title: Optional Image URL: [ Follow Ups ] [ Post Followup ] [ The Forum Board ] [ FAQ ] WWWAdmin 2.0a © 1997 Matt Wright and DBasics Software Company, All Rights Reserved

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