How to Setup Quickbooks Online for Flipping Houses

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Website: www.incomedigs.com
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So you know how to analyze and plan your rehab/ flip project...but how do you track your actual performance? Quickbooks doesn't intuitively lend itself to strong Rehab/ Flip reporting....UNTIL NOW! Check out my method for setting up Quickbooks Online to report on your Flip/ Rehab projects!

[@Incomedigs]

Check out my End-to-End Quickbooks Training. www.incomedigs.com/reab ($50 off w/ code KZbin50)

[@robertiannone2765]

This might be the most informative QuickBooks real estate tutorial I’ve ever seen. I’ve watched it six times.

[@Incomedigs]

Hi Robert, I'm so glad you found the video helpful! Yes! We offer a comprehensive, end to end course for setting up Quickbooks for your Real Estate Investing Business: www.incomedigs.com/reab. Along with the course, you'll gain access to weekly Q&A sessions and a community wherein I answer specific questions from students. The answers to these questions can come in the form of text, video demos, a live answer on the Q&A or a combo of all three. While we do offer custom coaching/ setup as well...I always recommend checking out the course first....as this typically provides the greatest "bank for your buck". Let me know if you have any specific questions! [e-mail]

[@successfultipswithdonna2241]

THIS MAN IS GOLD AND MUST BE PROTECTED BECAUSE HIS CONTENT IS AMAZING

[@ArthurAgrelli]

Lol hahahaha and His QB Online training is GOLD MAN!

[@jfranklin2970]

Thank you for this! My wife and I have been pulling our hair out trying to find great information to help us with managing our rehab expenses! great video on how to setup

[@OVDTIME]

I really enjoy your videos. I was wondering if you ever did a video on how to record a sale in quickbooks online when you partner on a deal and split the proceeds.

[@Incomedigs]

Hi There! Not sure if we have anything specific on this...but the main reason would be that not much changes. You would still record the sale to the "business as a whole". Treat the entire project to the business itself....ensure that the project is recorded in full. Then, if proceeds need to be split/ distributed to partners, you would record separate Owner's Equity Withdrawals. We discuss dealing with partners in great detail in our end to end training course, Real Estate Accounting Bootcamp: incomedigs.com/reab

[@johnlewisofficial]

This was a great video, thank you.

[@Incomedigs]

Thank you for watching!

[@HandsOnRealEstate]

great video! i've been wanting to take over book keeping for our real estate business

[@AdamKelly-w8f]

great video! Very helpful.

[@Incomedigs]

Thank you for watching!

[@jhdez6150]

Very interesting your explanation, I would appreciate it if you can explain the same flip property explanation in quickbooks pro desktop

[@toyabev3961]

this would be amazing if he would do desktop version videos. I am struggling to find any insite on that software.

[@sergetousignant4684]

Hello Nick! I love your videos. I am not an accountant. I know some basics in accounting. Your videos are comprehensible, short, informative and interesting. My question: When you flip a 2 appartement building, during the renovation of one of them, how do you handle the revenu of the other? Does it reduce the holding costs? Regards!

[@Incomedigs]

Hey! Thanks so much for watching and for the kind words! To your question..... I would put the revenue to "Rental Income". Its a little rare for a flip to have revenue before the sale..but in your case it works. I wouldn't reduce the holding costs...that kind of tells a bit of a different story. I like to say..."just tell the truth". In this case...its rental income...so treat it as such! We actually dig into an example like this in our end to end course, real estate accounting bootcamp. Definitely recommend checking it out! bit.ly/3xaBohM

[@bryanpeart]

Great stuff! Ty!!!

[@Incomedigs]

Thank You! Definitely check out our end to end course...Real Estate Accounting Bootcamp! www.incomedigs.com/reab2

[@flagatorfan]

Is anyone else not seeing “projects” any longer? Even get a 404 error when I use the search feature and click on their own link for projects.

[@Incomedigs]

Hey! Not having this problem...but I'll check with our community to see if anyone else is seeing the same.

[@michaelcasey5353]

Hi Nick, tremendous video! Some great hacks to get this right the first time. I used this video to assist a home flipper client to restructure his books. In regards to the product/service categories, I added a leading zero to the category description. I think this will solve the sort order when viewing the items in the project area - I think that you had concern about the order of rehab costs showing up in the project side. Thanks!

[@Incomedigs]

Thank you Michael...and excellent suggestion! Thank You for watching!

[@circlesquare6152]

@@Incomedigs which video should I watch before this so Ive done the analysis?

[@Incomedigs]

@@circlesquare6152 Hey! I don't have any videos specifically on analyzing flip properties. What I demonstrate here is just an example. What we are trying to do in QBO is mimic our tracking to our planning. So whatever you use to analyze flip properties, you would want to mirror those categories in your Chart of Accounts.

[@jagsterr1]

Fabulously organized!

[@Incomedigs]

Thanks for watching! Be sure to check out our end to end Real Estate Accounting course: www.incomedigs.com/reab

[@ginabaker1130]

Super helpful. Thank you!!

[@Incomedigs]

Thanks for watching!~

[@radhikarao2083]

Hi! Great Content! Few Questions: 1: Where would we add Hard money lender Origination fee during purchase? 2: Let's say we have to extend the loan to 3 additional months and that costs additional 1 point with raise of interest to .5%, how would this be noted? 3: Should we be organizing any bank charges to correlate or connect directly to this process? Mostly these dollar amount entries are manually placed, should we connect the actual charges from the bank?

[@Incomedigs]

Hi There! Thanks for watching! 1. The Hard Money origination fee is equivalent to "Points". I would charge this to Debit Service/ Interest expenses 2. You wouldn't record the interest rate changing in QBO. Simply recorded the added points and the interest expenses to Debit Service as incurred 3. Yes! I definitely recommend connecting your bank accounts. This will help to ensure that you capture all expenses. I demonstrate by adding manually...you would use the same journal entries and then you can "match" to your banking feed. We go over this and much more in our end to end course! www.incomedigs.com/reab2

[@rebecabayon6302]

excellent and very professional explanation !!! Thank you so much .

[@Incomedigs]

Thank You Rebeca! Please check out our end to end course: www.incomedigs.com/reab

[@BillP-dj5qi]

Interesting approach. However, in order to generate an interim P & L on any date, you would have to either reclass all of the expenses to the balance sheet, or generate a revenue entry equal to the sum of all of the recorded expenses for flips that are in process as of the date of your report. Reclass at year-end with reversing entry as you propose is fairly straightforward, but having to reclass just to pull an interim P & L seems cumbersome. Perhaps you have a different approach for generating interim financial statements? I find it easier to reconcile the balance sheet rather than the P & L, so I prefer to accumulate all flip costs on the balance sheet and then record a COGS journal entry. We currently use Peachtree and that approach works well with jobs/phases/cost codes. Do you have a QB setup that records flip costs to the balance sheet?

[@Incomedigs]

Hey! Thanks for watching and a great point! Yes! We cover the transfer to the balance sheet! Generally, most flippers (students of mine) prefer to track flip expenses to the P&L initially...and then transfer to the balance sheet at various increments. Some just do it at the end of the year....many would do it monthly. I just recorded a video on this exact topic: kzbin.info/www/bejne/p5WohHmPiriSq5o However! The video is all distorted...so I need to re-record. I will say though...we go over this in great detail in our end to end course: Real Estate Accounting Bootcamp: www.incomedigs.com/reab2

[@mattt6459]

If you’re ever in Minneapolis hit me up and I’ll buy ya dinner. Thanks for the amazing content man!!!

[@Incomedigs]

Thanks Matt! I will absolutely take you up on that! Let me know if you get stuck with anything else...also please check out our end to end course! www.incomedigs.com/reab2

[@sehilgenberg]

What are your approach in putting the costs on the balance sheet first then moving over to income statement at the time of the sale? Would the projects feature still be useful during rehab stage even though it hits balance sheet first?

[@Incomedigs]

Unfortunately no. The only transactions that hit the projects feature are those included on the income statement.

[@aphinvestments]

Nick, this is awesome!!! We have been trying to figure out the easiest, cleanest way to organize our Rehabs and this looks like the way to do it! 2 questions: 1) Should we still use Class (by property Address) 2) What is an easy way to put an Estimated ARV while you are rehabbing... i am thinking creating a fake ARV invoice that we use during the project... then once we sell the property, delete the invoice... thoughts?

[@Incomedigs]

Hi There...thanks for watching! Yes. I still use Class to track by property. I find that my Quarterly/ Annual reporting of my P&L still looks cleaner when I use Class for Property. Technically, you are "doubling" your effort as the project is already tracking this...but I find that the Project really muddles the p&L with way too many columns. As for the ARV...your idea makes sense. You would be using a "phantom" Sale as a placeholder to show your projected overall project Profit. My suggestion here would be to create a single journal entry in which you Credit Revenue (I use an account: "Realized Gains" or "Sale of Property) and indicate the class and project. Then, on the next line, Debit that same Revenue account but leave the class/ project blank. This will ensure that your project receives the Revenue line item but your overall books are not inflated. So, when looking at just the project report, you see the entire P&L. But, if looking at your business as a whole, you are not over-stating your revenue before its realized. Then, per your suggestion, you would delete this entry and replace with the actual sale once it closes. Great Questions!

[@heretowellness]

How do you post Mileage to your Project on a flip house... Cost of goods sold mileage? What is the offset?

[@Incomedigs]

Hi! Thanks for watching! You would offset mileage with "owner's Equity". Think of the transaction this way: When the miles are incurred, you as the owner are "investing" them into the business. To capture that expense, you would record it as Equity. Its the same as if you were to use your personal bank account to purchase construction materials. You would offset w/ owner's equity as well.

[@janamcdill9180]

This is great! Super helpful. If your Investment bank account is linked to QB, can you easily link all of your expenses (instead of manually adding a journal entry)?

[@Incomedigs]

Hey! Thanks for watching...so glad you found the video helpful! Yes...especially for the every day expenses associated with the flip. For the purchase/ sale...you could technically use the bank feed. However, for these more "complicated" transactions, I typically recommend creating the journal entry first...and then "match" to the bank feed. This ensures that you can include all the relevant details for each transaction. We go through a few great tactics for this in our end to end course: Real Estate Accounting Bootcamp. Check it out! www.incomedigs.com/reab2

[@janamcdill9180]

@@Incomedigs I appreciate it!!

[@tarjasovay]

Appreciating your content, thank you. Why do you decide to do it all on the PNL vs. the BalSht? I was taught that we want to have the Renovation costs and RE acquisition costs on the BalSht but you seem to show consistently everything on the PNL. How do you decided when a property costs go on the PNL vs. the BalSht?

[@Incomedigs]

Hi Tarja! thanks for your question! The important thing here: Every business is different...and everyone has different reporting needs. Remember that Quickbooks, first and formost, is a tool to help you manage your finances and make key business decisions. It just so happens that QBO can help us with taxes...but that is secondary. So, when it comes to whether or not your construction costs go to your P&L vs your Balance sheet...it depends on your business and what you want to see. The technique in this video is setup specifically for flippers who want to see their actual costs in a similar format to the format they use for analyzing properties. You may choose to have everything go to the balance sheet. Regardless of your strategy throughout the year, come year's end, you may need to make some reconciling transactions to move items from P&L to balance sheet. this would be specifically for tax purposes. So how do you know what will go to balance sheet (CapEx) vs. P&L? For that, I advise you to have a discussion with your accountant. They will help you determine what will be capitalized and what will be deducted. The good news is that its easy to transfer back/ forth via journal entries.

[@jamesklenke6982]

Is there a way I can get a copy of this spread sheet? I could not find it on your website.

[@Incomedigs]

Hi James...can't believe I missed this! The analysis spreadsheet is available on our home page. its the "Rehab Property Analyzer": www.incomedigs.com/

[@Dudebros11]

I do have to agree with all the comments below, I just wanted to first say thank you for the knowledge that you provide here on your channel and in a way that I can actually understand!!!! I do have one question for you. My husband and I have just purchased our first rehab but our private lender just paid cash for it directly to the bank and the amount never touched my bank account. However the home is in my husbands and I's name. I am totally clueless on how to record this into QuickBooks and to what accounts that might look like.

[@Incomedigs]

Thanks for the feedback and thanks for watching! Good question! On the transaction, you would simply replace any "cash due at closing"...which would be a credit with: "Hard Money Loan". The cash never touched your bank account...but the lender has definitely lended you the funds. Purchase Price - XXX (Debit) Closing Costs - XXX (Debit) Hard Money Loan - XXX (Credit)

[@latricelee8136]

Thank you for this, Nick! It's been very helpful. Two questions: 1. Are you just deleting the journalized transactions when they show up on your bank feed? 2. How would you journalize selling costs paid with a credit card?

[@Incomedigs]

Hi Latrice...thanks for your question! This is one of the most common missteps with the Bank Feed...don't forget about "Matching"! No, certainly do not delete the hard work you put into your journal entry...instead, "Match" it to the entry coming through your bank feed. Closing costs paid with a credit card...no need for a "Journal Entry". Simply add an expense indicating the Closing Costs account.

[@vivientano5723]

Amazing content. Thank you so much!

[@VickieVN]

How do I set this up in Quickbooks Premier Plus Desktop?

[@janamcdill9180]

Hello Nick! Quick question on the Profit box within Projects. Is there a way to add a line item under the Profit box? For example, if you made $37,952.94 and you're splitting the profit with a partner, how would you record that? And if you're paying yourself back, let's just say the closing costs when you purchased it, how would you record that as well?

[@Incomedigs]

Hey! Awesome question! I would create 1 or 2 "Other Expenses" for "Profit distribution - Part 1". This is cool b/c it keeps your Net Operating Income in tact. Because they are "other expenses, they show up and total below the NOI line. That then gives you your "Net Profit". We discuss this strategy in great detail in our end to end course! Definitely check it out! www.incomedigs.com/reab3

[@MariellaBosquez]

Very informative video! Is there a way to assign the product/service detail directly from the bank feed page? Instead of manually having to assign the product/service to each manual expense created separately and then matching it?

[@Incomedigs]

There is now!!! QBO literally just released this feature ~3 weeks ago or so! Check it out...if products/ services turned on for expenses, the drop down should now appear in your bank feed!

[@MariellaBosquez]

@@Incomedigs Okay, I don't know how to turn that on, I'll ask QBO.

[@marlainemayher4049]

I just realized that the sale of a property should zero out the purchase accounts - understood. However, the first BK didn't do this. I need to do journal entries to do this after the fact. In one instance, a construction escrow account made interest before it was disbursed - how do I balance this.

[@Incomedigs]

Hey Marlaine, Thanks for watching! Was the interest disbursed to the customer? If so, the disbursement would likely be split into at least 2 lines: 1 Bank account and 2 interest income. If you are dealing with a lot of old transactions., it might make sense just to do a "cleaning" journal entry to 0 out any accounts associated with closed/ sold accounts. You can then offset this transaction with an equity account (e.g. open balance equity)

[@masonhalsey8319]

This is exactly what I was looking for thank you!

[@Incomedigs]

Thanks Mason! Be sure to check out our end to end course if you want to go more in depth! www.incomedigs.com/reab

[@marlainemayher4049]

My boss needs the property to show as an asset on his balance sheet. If I show it here as a liability it isn't an asset. How do I show as an asset instead?

[@Incomedigs]

Hi Marlaine! Thanks for watching! In this example, the cost of the property is actually shown as an Expense/ COGS. This technique would only be used for "quick flips". Flips that are not in your books for long. For anything that you want to show on your balance sheet...you would have accounts setup to differentiate these assets. Simply create the following asset accounts: 1. Land 2. Purchase Price 3. Closing Costs 4. Capital Improvements. All would be assets! You would debit these asset s when the property is purchased.

[@anitagreenwalt5704]

Mr. Digs, I do not see the link to the products and services methodology video. Please direct me to it. thanks.

[@Incomedigs]

Hi Anita! Here's the playlist on using the Products and Services feature: kzbin.info/aero/PL89qBCL2vU2uG03qnF_SPUw_NX7ZtauNQ

[@prosoldrealestateoffice8973]

Great info.!! Thank you! Is it me or is the rehab-estimator spreadsheet you're offering different from the one in the video?

[@Incomedigs]

Hey! I think it might be a bit different....Its evolved a bit over the years. This video is a bit dated. The one on the website is the most up to date!

[@heathlanyon5683]

I’m not finding your video on Products and Services. Would you mind linking to it in a comment or let me know what to search for?

[@Incomedigs]

Hi Heath! Here's the playlist on using the Products and Services feature: kzbin.info/aero/PL89qBCL2vU2uG03qnF_SPUw_NX7ZtauNQ

[@msbellamy07]

Thank you for this question. That's exactly what I was going to ask😊

[@haleybonczyk9952]

Have you ever run into an issue not having the flip on the balance sheet? I love this method but that is the only drawback I see.

[@Incomedigs]

Yes! I teach how to transfer Flip transactions to/ from the balance sheet. This allows your business to be flexible. You can track the "project" as a P&L....and then "move" the transactions to the balance sheet for YE taxes or just to "correct" your books while you wait to sell. I teach this technique in my end to end course: Real Estate Accounting Bootcamp! Definitely check it out...the price of the course increases on Monday. www.incomedigs.com/reab2 (Enter Code KZbin50 for $50 off!)

[@lukeslapa1729]

Can you share the excel template? TIA

[@Incomedigs]

Yes! Here is the template: www.incomedigs.com/rehab-estimator

[@itsmyownfreakshow]

Is there a video to all the products/services you created?

[@Incomedigs]

Yes! The latest video is here: kzbin.info/www/bejne/baWuhGesiq1mqq8 There is also a link to download the list of products/ services.

[@MikeySauls]

Great content! Thank you so much for sharing all the details! I'm watching a bunch of videos and as you mentioned everyone does it a little differently. What's the reasoning behind categorizing items as "cost of goods sold" instead of "other current assets" or vice-versa?

[@Incomedigs]

Somehow I missed this! Sorry Michael! The reason to use COGS would be to get a P&L for your flip that closely matches your analysis. When you are planning out a flip, you are likely looking at SALE PRICE - PURCHASE PRICE - PURCHASE COSTS - HOLDINGS COSTS - REHAB COSTS - SELLING COSTS = PROFIT Using COGS is a way to replicating that same "Income Statement" approach.

[@xdbooboo1]

@@Incomedigs coming back to this as I'm seeing several other KZbin videos putting under an asset account. Shouldn't this be an asset though? is this how you really do all your flips by putting them all under COGS. I'm also reading lots of comments where nothing should hit the P&L, until the house sells and then move everything to P&L.

[@Incomedigs]

@@xdbooboo1 Hi There! Thanks for watching! The first thing to emphasize is that there is no "one size fits all" when it comes to using QBO. Even if your CPA wants to make it seem like there is only "one right way". QBO is a tool, first and foremost, to help you run your business. To that end, I would encourage you to use whichever strategy works best for your businesses. When I work with Flippers, I find that most of these investors are interested in seeing a P&L throughout their project. With this in mind, we will typically use the COGS method out of the gate. You can certainly adjust the approach a bit to meet your needs. One thing to remember: You will not get much use out of the "Projects" portal unless you are categorizing your expenses as either COGS or Expenses. Fixed/ Current Assets will not appear in the projects portal. We discuss many various strategies in our end to end course, Real Estate Accounting Bootcamp: www.incomedigs.com/reab2

[@toddasper2685]

Thank you for this video. I have a small house flipping business, I and used this video to help me to categorize my expenses for each house by using customers in QuickBooks Desktop Pro. Before I just used one inventory account for each house, which obviously didn't provide much detailed reporting. I'm having an issue, though, with the Profit and Loss Report showing columns by Customer:Job. This report works perfectly for the items assigned to a customer, but doesn't show most of my general transactions that aren't assigned to a customer (eg computers, tools, office supplies). It shows a random few of those transactions under the "no name" column, but most are entirely excluded from the report. So this report isn't as helpful because the overall net income is wrong, doesn't agree to the net income on the regular profit/loss report without columns. Just thought I'd check to see if you've run into this issue before. I called QuickBooks help and they didn't know what to do. Thanks!

[@Incomedigs]

Hey Todd, Thanks for reaching out! Your Profit and Loss should have a column at the very far right that indicates "Not Specified". If you are not seeing the totals that you are expecting, it is likely that you have some sort of filter that is reducing your results. Here is my suggestion....start from scratch with the report. Go to the standard reports, select profit and loss. By default, QBO will include everything with no columns...just the total. Make sure your time frame is correct. Then, click "Display Columns as" and indicate "Customer". If you follow those steps, QBO should not be limiting your results in any way. You haven't set any filters other than the date. That is all I can think of. I haven't encountered this problem in my own books or in working with clients. Let me know how that goes. Thanks...Nick.

[@toddasper2685]

@@Incomedigs Thanks for the reply. I do have a column on the far right, it's called "No name." A few random transactions are showing there, but the vast majority are not. No other filters on besides "All income and expense accounts." No worries. It's frustrating that it doesn't work, but I can make do. The report without columns works fine, I can see the totals of those general expenses there. Thank you

[@EmilyFerguson-Roberts]

We capitalize our properties and renovation costs. as we accrue costs, how can we have it show up on the project?

[@Incomedigs]

Hi There! Thanks for watching! The only way to have costs show up on the project is to categorize to Expenses or COGS. Of course this will go on your P&L...not your balance sheet. However, you can track to COGS and then transfer balances over to your balance sheet. We go into this in great detail in our end to end course: Real Estate Accounting Bootcamp: www.incomedigs.com/reab2

[@andreaseiler8735]

I just took on a flip client who is just starting and will only be flipping one house at a time. Can we just use customer and not use project? Trying to keep cost down with regards to the Quickbooks subscription and don’t want to enable projects if we don’t have to. Furthermore, can you provide a list of your products and services?

[@Incomedigs]

Hi Andrea....thanks for watching! Yes! You can certainly just use Customers. You just won't get the reporting that comes with "Projects". You can download the Products/ Services list directly from our website: www.incomedigs.com/

[@mattsmith104]

This is a GAME CHANGER! Is it possible to import the list of products/services you have into QBO?

[@Incomedigs]

Hey Matt...thanks for watching! Yes! You can download on our page: www.incomedigs.com/ its the excel "Products & Services" download

[@mattsmith104]

@@Incomedigs Sweet! How do you classify the transaction of the funds being deposited that I receive from the lawyer after the sale? Does it get classified to the project?

[@Incomedigs]

@@mattsmith104 Just depends on what makes up the funds. If they are the sales proceeds, they would have been accounted for in the journal entry of the sale. "Net Cash at Closing" would be a Debit to your checking account. If you don't receive them on the day of closing...not a big deal. I would keep it within the single journal entry. Then, as the funds hit your bank account, you can "match" the bank transaction to the journal entry. If the check from your lawyer is a bit different....e.g. Tax credits that weren't accounted for on the closing statement....you would just categorize those separately as they come in. They would get classified to the project under the COGS that they are related to. If you are receiving funds, this is the equivalent of getting a "refund"....it acts as a "Negative expense"

[@re-avail5660]

Awesome, video Nick! I have set everything up this way now but wondering if you have figured out a way to record a return against something on the products and services list? For instance if I buy tile for a bathroom and then decide to return that tile and buy a different tile instead I can return it against the Rehab expense account but when I look at my break down of where I spent my money on that project my bathroom expenses are over inflated because it is accounting for both tile purchases.

[@Incomedigs]

Hi There! Thanks for watching! Good question...For credit card purchases, its really easy! Create a new "Credit Card Credit". This will bring up a screen that looks exactly the same as an expense. Simply log to the appropriate product/ service. For cash/ Bank charges its a bit more tedious. You would create a vendor credit...and then use a journal entry to "move" the vendor credit to your bank account.

[@SweetDevineAngkay]

Hi Matt, thanks for this video! But where do I see the projects in customers? I don't think it's available

[@Incomedigs]

Hi there...Check your QBO subscription. Projects are only available in QBO Plus and beyond.

[@patriciacausillas5853]

Hi Nick, What if I manage just the flip for the investor? How should my chart of accounts be set up?

[@Incomedigs]

Hi! Thanks for watching. If you are managing the flip, you'll be acting like a General Contractor. With that in mind, you would likely have COGS accounts for: Materials, Labor, Subcontractors. Your Products and Services would all map there accordingly. You would not log the purchase, buying costs, holding costs. You would also have Revenue accounts to indicate the Income from your clients. This would have accounts like: GC Services, Billable Expenses Income, etc. I would encourage you to watch this video: kzbin.info/www/bejne/amO3goJ9rciahZY It is more geared toward working for third parties (not your own properties)

[@bmercedes1233]

After you know your profit is there some way of calculating how much taxes to put aside come income tax time?

[@Incomedigs]

Hi! Thanks for watching! I would do any tax prep calculation outside of QBO. QBO will tell you the profit to put into that calculation. You would need to consider other factors: Other income sources, deductions, etc. QBO will deliver key data to help you with that calculation.

[@shaila3387]

I have QBO Online, not the PLUS version. It seems only PLUS version has projects. Is there other ways to get around the "Project" part and use some alternative method?

[@Incomedigs]

Hi Shaila...thanks for watching! Yes, you can simply use "customer" to manage your flips. You won't get the fancy "projects portal", but you can still filter your P&L by Customer to see profitability by project.

[@OscarGomez-sp1zn]

What would be the flaw of using "customers" as the name of the seller you purchased the property from (especially since you may buy several from the same seller) and adding the property address for the "projects" to keep track of everything? Seems like it might make things cleaner on the books and now you're able to keep track of both? What is the flaw in this logic, if any?

[@Incomedigs]

Hi Oscar...thanks for watching! Yes...that strategy would work. Keep in mind that when you create a P&L with Customers as the columns...QBO will automatically display the parent customer as well...in this case the seller. Might be a good thing...might be a bad thing. But generally speaking...yes, you can certainly add projects as sub-customers of the Seller.

[@itsmyownfreakshow]

so is there a video that links to how this gets added to the overall business balance sheets?

[@Incomedigs]

Yes! In this video: kzbin.info/www/bejne/gorbenmvhJirbZI I demonstrate how to "move" expenses from the P&L to the balance sheet.

[@macclelland]

Can you clarify why it is better to classify expenses under "Item Details: Product/Service" and not under "Category details: Category"? In either section, I am able to identify my "Customer/Project" (which are the various flip jobs I am tracking)? Thanks!

[@Incomedigs]

Hi! Absolutely! The "Items Table" provides an added level of detail...an additional dimension to our reporting. We can have a detailed list of categories/ cost codes/ products/ services...that all map to a category. This allows us to track actuals at the same level of detail that we estimate. It also helps to keep our COA clean. For example: Rough Electric, Rough Plumbing, Cabinetry, etc....these categories are too specific for the P&L. We can set these up as "Products and Services" (items)...and map them to 1-2 accounts on the P&L. Our P&L will stay neat and concise...and we can drill down into these expenses to see the details by cost code. Its the best of both worlds! We discuss this strategy in detail in our end to end course: Real Estate Accounting Bootcamp: www.incomedigs.com/reab2

[@macclelland]

@@Incomedigs Great. Thank you for your quick response. As a follow-up, do you only use Products/Services (Items Table) for Rehab expenses? Do you also use Products/Services for things like Buying Costs, Holding Costs, Selling Costs & Debt Service? Why or why not? Thanks!

[@Incomedigs]

@@macclelland Good question....and yes! We typically just use Products/ Services for Rehab expenses. The reason is that we can benefit from the additional detail that products/ services provide. We have 1-2 main categories that show up on our P&L...but when we drill down we get to see some really useful detail (rough electric, rough plumbing etc). With the other cost categories, there is not as much of a benefit. Closing costs for example: Do we care how much went to title charges vs appraisals vs lawyers?....Maybe...but probably not. Even if we did, the list of detailed categories is small enough that we could likely get away with Category->Sub Category on the P&L. We discuss this in great detail in our end to end course: Real Estate Accounting Bootcamp: www.incomedigs.com/reab2

[@helenli1966]

This is great! One question: how do you record the tax in profit and loss? it looks like the tax is recorded as a profit instead of expenses. Thanks

[@Incomedigs]

Hi Helen, The Property Tax should be recorded as "Holding Costs". This is a COGS that will be included in the overall project expenses. It is possible that you will be credited property tax expenses if you received this credit at closing. But over the course of the project, you will likely have a positive Expense for property taxes...which will be categorized as Holding Costs.

[@bastiaandevries2844]

How do you properly record deposits from draws. Let say my lender send 20K for first draw how would i properly allocate that ?

[@Incomedigs]

Hi There...thanks for watching! When you first establish the loan, you will set up an "Other Asset" for the construction/ loan escrow. The cash sits there until you receive draws. Once you receive a draw, create a journal entry where you debit your checking account and Credit your construction/ Loan escrow. We discuss this strategy in great detail in our end to end course: www.incomedigs.com/reab2

[@mikeluu23]

Great Video. How do you categorize Down Payments? Would it be part of buying costs? It comes out checking account when you wire so I am confused how we would show both, an increase in buying cost and a deduction from bank account.

[@Incomedigs]

Hey Mike...thanks for watching. Your down payment will be allocated toward an "Other asset Account". something like "Purchase Deposits". After submitting the deposit...before purchasing the property, this account will have a positive balance. The money is still yours...you just don't have control over it. When you close on the purchase of the property, you will credit this "Other Asset" account to bring it to 0. Those funds will then be deducted from the total $ needed to close. We discuss this in great detail in our end to end course: Real Estate Accounting Bootcamp: www.incomedigs.com/reab2

[@boynumber6]

Super appreciative of this information!! Thanks for posting this. I was wondering if you were rehabbing your primary residence to sell after 6 years of ownership, can you apply this same strategy and skip the purchase price or do you recommend digging up the settlement statement and starting from the purchase of the property? Thanks again and keep up the amazing content!

[@Incomedigs]

Hi! Thanks for watching! I don't think it would hurt to have SOMETHING in QBO for the purchase. Even if you can't find the settlement statement, just getting the purchase price would b beneficial to seeing the project as a whole.

[@boynumber6]

@@Incomedigs Thanks for the reply! Can you give an example of what that journal entry could look like in this case being that the transaction is so old and the rehab is starting next week? should I just include purchase price? Anything helps thanks again!

[@Incomedigs]

@@boynumber6 ​Yes! Date: Take a guess at the purchase date. Does not have to be perfect....at least try to get the year correct Flip - Purchase Price: XXXX - Debit Opening Balance Equity: XXXX - Credit

[@Meech1000]

I put my cost of material to the cost of goods sold. Is that ok? Also, should I expense the home purchase or put it to fixed assets?

[@Incomedigs]

Yes! Cost of materials as cost of good sold is perfect! Check out this more recent video where I discuss Flips on your balance sheet vs P&L: studio.kzbin.infoaRL1MDYFMZ4/edit You can put the purchase price on your P&L or your balance sheet initially...If you still own the property at year end, you'll want the flip purchase to show up on your Balance sheet for taxes. Also check out our end to end course! www.incomedigs.com/reab2

[@bridgewaterestateholdings2380]

How can I get a copy of your excel spreadsheet

[@Incomedigs]

Hey! you can download the spreadsheet here: www.incomedigs.com/rehab-estimator

[@jodypupecki]

This was so helpful, thank you so much for sharing! When I do a journal entry that includes the purchase price, how would I categorize a construction holdback in that journal entry? It's not buying cost and it's not really a holding cost either.

[@Incomedigs]

Hi Jody! Thanks for watching...and great question! The Construction holdback is typically tied to a Loan. So, when you purchase the property, you will almost certainly Credit a Liability account (E.g. Hard Money Loan). With a standard loan, you would credit your Liability account and Debit the checking account that receives the cash. However, with a construction loan, you don't receive the cash...at least not yet! So, I suggest you setup an "Other Asset" account to house the Construction Holdback. The money is yours...you just can't touch it yet. Once your lender releases a draw, you would Credit your Other Asset Account and Debit your checking account. Make sense? We discuss this in great detail in our end to end course: incomedigs.com/reab

[@h3artz.4.s4turn]

how do you account for escrow holdbacks?

[@Incomedigs]

Hi! Thanks for watching! When you record the purchase of property, you will credit your LT liability account for a loan...and Debit an "Other Asset" account for "ConstructionEscrow". The escrow will sit in this account until you receive a draw. You will go about your renovation as you normally would...paying your vendors from bank/ credit card accounts. When you receive a draw, you will simply record the deposit in your bank account and indicate "category" as Construction Escrow. We go into this in great detail in our end to end course, Real Estate Accounting Bootcamp: www.incomedigs.com/reab2

[@jessejimenez5232]

If you purchase a property for a flip ,you can use it as cost of good sold. If you use it as a rental property then what would you label it as?

[@Incomedigs]

Hi Jesse...thanks for watching. Rental properties should be logged against Fixed Assets. You would have subcategories for 1. Land 2. Building 3. Closing Costs 4. Capital Improvements

[@jessejimenez5232]

@@Incomedigs Thanks for the info. What If I do not know which way im going with the property either flip or rental . What should I classify it as?

[@Incomedigs]

@@jessejimenez5232 good question! I suggest sticking with your initial assumption or whatever route you usually take. You can always move the balances later...if/ when you decide to change your strategy.

[@aaronsteeves7976]

Did you ever figure out why the order wouldn't correct itself under COGS?

[@Incomedigs]

Hi Aaron...thanks for watching! No! I have no clue why that happened...and I haven't been able to replicate the problem since. Did this happy to you?

[@timhelton]

Is that first spreadsheet for sale anywhere?

[@Incomedigs]

You can download the estimator for free! Here: www.incomedigs.com/rehab-estimator

[@robert8273]

when you set up your journal entry, can you just add your closing costs as one entity vs each individual fee?

[@madpsycho279]

can you do the same video with desktop pro 2020 ?

[@AndreasvanLeeuwenFlamino]

Hi Nick, I love your video and sheet. Quick question about the labels in the Loan Details section; why do you call the two posts Projected Total Income and Projected Annualized Return? It looks to me like it's the Projected Total Debt Service and Projected Annualized Interest.

[@Incomedigs]

Hey Andreas...good question! The labels are as such in the analysis because its intended to be presented to a lender. The idea is that we analyze the property and provide the summary to a lender...clearly indicating the projected income/ return they can expect.

[@AndreasvanLeeuwenFlamino]

@@Incomedigs That makes total sense. Thank you, Nick.

[@elamercado3153]

Thanks for the info.. Would you mind checking if those free spreadsheets like COA and Analyzers are still working? It seems the link is broken.

[@karahardman3758]

When you invest in a property with a partner with the flip, what gets distributed. The cash back, net profit or both?

[@Incomedigs]

Hi Kara...thanks for watching! This depends on your partnership agreement...but in general terms: Net Profit. Your Cash back is not necessarily your profit. The cash back takes into consideration financing on the property. Also, if you paid cash for renovations, the cash you receive back would be more than your profit. In almost every case the profit would be the determining factor on what to split.

[@shawnaswann7606]

Does your calculators work with Mac products? The calculator did not calculate once the information was plugged in. Thanks in advance for your assistance.

[@christopherdasilva7655]

I know this is about 1.5 years old, but for Quickbooks Simple Start, is this still a good tutorial? It does not have the projects feature unfortunately, which seems like a big part of this tutorial. Thanks in advance.

[@Incomedigs]

Hi Christopher....correct, you would not have the projects features. However, you could still use "customer" for all the transactions. You wouldn't have the "Projects" portal like I display here...but the functionality would be the same.

[@DanikaShipman]

Does QB have to be the online version or can it be the desk top version in order to do this?

[@Incomedigs]

Hi Danika! While I'm not an expert in QB Desktop, you should be able to get the same setup. You will use "Items" instead of Products and Services. You will be able to differentiate properties through Classes as well.

[@guilhermoplada7894]

Outstanding tutorial. Thank you so much for that. Question, I am also involved in the Tract/spec homebuilding business. Would you say I can use the same account system for those sectors or should I have a different approach?

[@Incomedigs]

Absolutely! This would work pretty much the same way!

[@kathyk2848]

The Podio templates isn't working

[@vitaescalicas5346]

Great tips! Is the projects feature available when using the QBO Essentials subscription?

[@Incomedigs]

Hi There! Unfortunately, No. The Projects feature is available on QBO Plus and above.

[@GLLHamp]

How do you account properly for a flip that overlaps in to two fiscal years? Why wouldn't you set up the house as an inventory item and then add "parts" to the item and then run it through as finished goods at time of sale?

[@Incomedigs]

Glenn brings up a good point (which we discussed over the phone last week!) You can certainly use inventory for your flips. I personally like to utilize Revenue and COGS...but using Inventory out of the gate is great option!

[@toblerhomes4766]

Hey Nick, Can I create just one customer for each category of projects (FLIPS,WHOLES SALES,RENTALS,CLIENTS) and Put all projects related to that category under the same customer?

[@Incomedigs]

Hi there...yes, you could do that. In this case, your category would be the "Parent" w/ all specific projects falling underneath the type. That is just fine.

[@mikeccali84]

Is there a reason you don't use properties instead of customers?

[@Incomedigs]

Hey Mike! By "Properties" do you mean "Locations". Locations do not allow you to split a transaction by line item. We like to use customers/ classes so that we can split a transaction.

[@mikeccali84]

@@Incomedigs Yes, locations. I'm using locations and customers and it appears to be working just like you set it up except I can look it up by property in the reports. I'm having trouble moving numbers to my balance sheet and back though so a video about that would be greatly appreciated.

[@Incomedigs]

@@mikeccali84 thanks for the response! Sounds good! We'll try to get that in the queue. I definitely recommend checking out our end to end course. We go into these topics in detail and have a Q&A community to dig into the more advanced questions: www.incomedigs.com/reab2

[@CJGrenier]

Just re-watched because it's so helpful! What if I received a $50K rehab loan for rental (not flip), I categorize it under 'Other Current Liability', then when I re-pay it do I categorize the re-payment as the same thing?

[@Incomedigs]

Hey Chris...Yes! When you first categorize the incoming loan, the balance will appear as a liability on your balance sheet. You may make interest payments on this loan during the rehab. If so, these interest payments would be categorized as expenses (or COGS). They would not reduce the principal of the loan. When you prepay, you categorize as the same liability account...which will bring the balance down to 0.

[@evelyncardenas9794]

Thank you! this is very helpful. Is there any way to incorporate the budgeted amount in each category (plumbing, electric, etc) to help track whether you are on target? or does that always have to be on a separate spreadsheet?

[@Incomedigs]

Hi Evelyn, unfortunately, QBO does not have a great "project by project" budgeting feature. You would likely need a separate spreadsheet. There are supplemental project mgmt tools that integrate w/ QBO...incorporating a "budget vs. actual" functionality. Specifically, Buildertrend will do this. This video demonstrates a really quick, repeatable approach to exporting to excel or google sheets: kzbin.info/www/bejne/qX_EnWdqlN58e6s

[@TASCPublicAccounting]

Why are you capitalizing Selling costs? Under 263A selling costs are not capitalized. You could offer to pay sellers commission (reducing sales price) on purchase of properties that are going to span over 2 years and accelerate the deduction.

[@Incomedigs]

Hi Mark..thanks for watching! We don't capitalize the Seller Costs...they hit our P&L. We do transfer them to the balance sheet as assets if our projects spans between multiple tax years. As always, I recommend reviewing any accounting strategy with your tax professional.

[@Av-yf6nn]

Great video! Thank you! Do you have Chart of accts template for real estate ?

[@Incomedigs]

Hi There! Yes! You can download the COA here: www.incomedigs.com/chart-of-accounts

[@Av-yf6nn]

@@Incomedigs Thank you so much! Your content is truly amazing!

[@Incomedigs]

@@Av-yf6nn Thanks for watching! As a reminder, we have our end to end course available that covers everything related to RE Accounting! www.incomedigs.com/reab2

[@hicks72004]

Did this video change? What happened to the part where you transferred COGS to Balance Sheet?

[@Incomedigs]

Hey Brandon...the video did not change. Maybe you are thinking of this similar video: kzbin.info/www/bejne/gorbenmvhJirbZI

[@madpsycho279]

I just brought quickbooks desktop pro 2020 . i was looking to set up my first flip house and my quickbooks doesn't match with yours. pulling my hair out! i'm new to quickbooks

[@rajujassar]

I think I was able to figure out how to do it in the desktop version. Basically you need to set up your Chart of Accounts first and then create customer with a Job. Under the customer-Job you will enter the property address and track all costs from there. To record the purchase you use a Journal Entry and pick the Job name (Address). When he says Products & Services those are just recording the expenses. When you sell the house you will create another J.E. and record using his method. You can then go to the reports and run a P&L by Job. For me that worked. Good Luck!

[@rapidoffer61]

Fantastic, informative, and very useful. Thanks! Question: In Journal Entry, I'm receiving an error message asking to balance debits and credits. Is there a general workaround to this, must I always balance in Journal? Don't want to tie the credit to a specific checking account just yet. Thanks!

[@Incomedigs]

Hey there...thanks for watching! Yes...you must always match Debits to Credits in a journal entry. This is a fundamental element of any accounting software. The software needs to answer the question: "where did the money come from?" and "where did the money go". If QBO allowed you to have unmatching Debits/ Credits, you would have a mismatched balance sheet. If the funds for a credit card payment came from a personal account...you could simply use "Owner Equity" to account for "Where did the money come from".

[@rapidoffer61]

@@Incomedigs Thanks! I appreciate all the information you've provided.

[@andrewsarrouf7735]

Very helpful, Thank you Nick! When you create an expense with products and services that would go towards the "Flips - Rehab Costs" account, would you then "exclude" those transactions in your bank feed? Also, when creating a journal entry with a line that debits interest paid to lender, how can we also assign this transaction to a vendor and not only a project? Goal is to be able to track the interest amount paid to the private lender by the end of the year.

[@Incomedigs]

Hi Andrew...thanks for watching....Two great questions! 1. No need to "exclude". Instead, use the "Match" function. This gives us the best of both worlds. The transaction is "double checked" by the system suggesting a match on the bank feed. Matching will not duplicate the entry...just assign the existing transaction to a downloaded bank transaction. 2. Unfortunately, on a journal entry, we only have 1 shot at the "Name" field. QBO Does not give us a spot for entering both the customer and the vendor. This is super annoying...and really one of the only limitations to journal entries (The other being lack of products/ services). You would need a supplemental transaction as a work around. 1 way to do it would be to create a separate journal on your closing date where you Credit interest with the name blank and Debit interest with name populated to the vendor. This specific transaction will be Net 0 to your books...and will not influence project reporting. However, the interest paid to the vendor will be tracked for your year-end 1099. Of course another "solution' would be to use class instead of customer....but that is a major change. I would prefer the workaround before completely changing your setup.

[@andrewsarrouf7735]

@@Incomedigs Thanks for responding man! This is super helpful. 1. In some cases I would be dividing a payment that I did to several products/services when I manually add the expense. That's why I thought about excluding because a match wouldn't be possible with the amounts being different. (i.e. When I pay the GC a draw of $1,000 for Lighting Fixtures and Landscaping, it comes to the bank feed as a large transfer while I manually add the expense as $500 in "lighting" and $500 in "landscaping".) Unless there's a way to use the split feature and put a larger purchase into several categories? or would you just exclude in such cases? 2. That was exactly my thought! I'll do that from now on. Thank you so much.

[@Incomedigs]

@@andrewsarrouf7735 This is the exact scenario. Within an "Expense" or a "Check", you have the ability to break the expense down into 1 or more "items" (products/ services). All of those will add up to the total withdrawal from your bank. That total is all that matters on the match. As long as the total of the manually added expense = the total transaction amt coming through the bank...you can use the "Match" function.

[@calirealestate]

Minor question, but I noticed you have the "use for billable expenses" checked when you are in your chart of "accounts > new" pop-up box. Mine doesn't have that option. Do you know how to activate that? Great video !

[@Incomedigs]

Hi Heath! Thanks for the feedback! This feature should be available on QBO Plus and beyond....and can be turned on in your Settings. Under your settings, in "Expenses" there should be an option to "Track Billable Expenses to Customers". If that is turned on, you should have the option when creating new COA accounts.

[@calirealestate]

@@Incomedigs thanks for your response, I know you're busy.

[@EurotechElite]

Thanks so much for posting this. So using this, you're putting the purchase directly into cost of goods sold so the balance sheet will have "negative equity" for the property until it is sold. Am I looking at that correctly?

[@Incomedigs]

Yes....at least initially. We are using COGS so that we can show a nice, neat P&L report for the project that matches our Analysis. However, we can always transfer the Purchase and other COGS over to the balance sheet to bring our books back in line. We can do all of this without impacting our profitability report on the Projects tab. Its a "best of both worlds" scenario.

[@crystaldavidson2795]

Can you explain how to bring the balance sheet back in line at year end?

[@Incomedigs]

@@crystaldavidson2795 You would make a relatively simple journal entry: Debit Fixed Assets - Potentially separate accounts for Building, Closing Costs, Rehab Costs Credit the COGS categories that you recorded transactions on throughout the year. You would have a line for every COGS category that has a non-zero balance.

[@c.s.5218]

How does this affect the Balance Sheet report doing it this way? Shouldn't properties should be on the balance sheet as Asset? If I do it as an Income account, and I need to run a Balance Sheet Report, won't it be wrong? I see another reply where you suggest creating an end-of-year entry or something... but what if I need to run a report before year end?

[@Incomedigs]

Hi C.S....thanks for watching! Whether your properties hit the P&L or the Balance Sheet is a choice...at least throughout the year as you are operating your business. Many FLIP investors prefer to have the all costs associated with the property, including the purchase, listed in the P&L. This leads to a P&L that matches the analysis. However, you can certainly log your purchase and even renovations to your balance sheet. In theory, this is "More accurate"...but it all comes down to the reporting you want to see to help you run your business. At the end of a tax year, you would almost certainly transfer any In-Progress flips to your balance sheet. You would likely wait to take any deductions on the project until it is complete. Remember: QBO is software to help you run your business. It just so happens that it can help with taxes too. You can pick and choose strategies that make the best sense for the reporting you need.

[@allisonhuynh1180]

Would you recommend using QBO for AirBnB Host? If yes, have you done any accounting work for AirBnB host using QBO plus?

[@Incomedigs]

Hi There...yes! QBO works great for AirBnB. I have several students in Real Estate Accounting Bootcamp who have Short Term rentals as well as Long term...I haven't done any specific coaching..but many of the concepts of long-term rentals apply: www.incomedigs.com/reab

[@linapena3030]

How would I record the draws for the Rehab, it’s not income, would it reduce the other rehab expenses on the books?

[@Incomedigs]

Hi Lina...thanks for the question! Draws will not impact the Profit and Loss at all. They are not income...they are not expenses. They are simply "balance sheet transactions". Think of your Draws as a transfer from one bank account to another. When your construction loan is funded, a % of the loan is stored in an escrow account to be paid out in draws. At the time of funding the loan, you should put this amount in an "Other current Asset" account. Think of this account as a bank account that you own, but you can't control. It's your money...you took a loan out for that amt. The bank just wants to make sure you are building in order to release it. When you get a draw, you would simply debit your bank account and credit the draw account. We talk about this in great detail in the community and live q&a's included with our end to end course...real estate accounting bootcamp: www.incomedigs.com/reab

[@CJGrenier]

The rehab analyzer on your site for download does not seem to be working, signed up but that never came through 😕

[@Incomedigs]

Hi Chris...sorry about that...and thanks for letting me know! Please email me directly and I'll send you a copy: [e-mail]

[@hatimhijazi1885]

How possible I can have that spreadsheets?

[@Incomedigs]

Hi there! The spreadsheet is available at incomedigs.com (See "Rehab Analyzer")

[@linapena3030]

Which category would the loan payment fall into?

[@Incomedigs]

Hi Lina...thanks for watching! Your loan payment could potentially fall into more than 1 category. If you are simply paying an interest only payment for a hard money loan, you would categorize this as "Interest" (COGS account). IF you are paying interest and principal, you would split your transaction accordingly: A portion to interest, and a portion directly to your Liability account which holds the loan.

[@saurabhgupta3046]

Hey some quick questions - how do you track the assets if they have not been sold in that particular year? and how do you track the depreciation on it? And what about if the asset did not sell in that particular year? Do you still claim the Improvement Expense in that particular year?

[@Incomedigs]

Hi Saurabh...thanks for your question! If the asset was purchased/ sold in the same year, there is no reason to track depreciation. If the asset did not sell within the year it was purchased, must CPAs would recommend you hold off on deducting those Flip-related expenses until the following year. The expenses would go on your balance sheet as an asset. Again, no reason to depreciate as you will be selling the property quickly. That is generally how its done. We discuss this and many other topics in our end to end training: incomedigs.com/reab

[@saurabhgupta3046]

@@Incomedigs Got my answer, Thanks you very much. :)

[@anitagreenwalt5704]

@@Incomedigs Can you explain how to postpone deducting the rehab expenses until the following year since they will be on the Cash Basis P&L? My client's business began in 2020; are rehab companies topically accrual instead of cash basis?

[@Incomedigs]

@@anitagreenwalt5704 Sure! The technique is to create a single journal entry at year end to move your rehab expenses from your P&L to your balance sheet. You'll need an asset account: E.g. "Flips in Progress". Create a journal entry as of the last day of the year (12/31/2020) wherein you Debit the new asset account and credit your Expenses account(s). This will take the value spent on your rehab out of the P&L and into your Assets.

[@ArthurAgrelli]

@@Incomedigs this is exactly what I was looking for. Account Type: Fixed Assets | Detail Type: which one I should use?

[@funkymonkeypowersports]

HOW MUCH WOULD YOU CHARGE TO SET UP OUR QUICKBOOKS FOR FLIPPING?

[@Incomedigs]

Hi! Thanks for reaching out! I no longer offer custom setup services...but I do offer one on coaching. We could go through your books/ situation and get some quick wins...we can also come up with a plan for you to bring on a bookkeeper/ VA to help out. You can book here: calendly.com/nickbaldo/1-on-1-coaching-session?month=2022-02

[@SydetraGordon-q4m]

Hi Nick! Great Video! Quick questions/clarification. If we don't sell the property at end of year, do we put those expenses under inventory and it'll be on balance sheet? & then create another journal entry to transfer the inventory to COGS accounts once the flipped property is sold?

[@Incomedigs]

Yes! Exactly. You could actually "move" from Balance sheet to COGS on 1/1/XXX (of the next year) and go back to tracking everything on the P&L. Moving to Inventory for 12/31/XXX (past year) checks the box for taxes. Many flippers like to consistently track everything on the P&L. For that reason, this quick "back and forth" is a good way to accomplish multiple goals.

[@SydetraGordon-q4m]

That makes sense! Thank you @@Incomedigs

[@SydetraGordon-q4m]

another question, Sorry. Do we move the basis of the property to COGS when it sells? Or leave it? @@Incomedigs

[@Incomedigs]

@@SydetraGordon-q4m Up to you! If you move it to COGS...your "Revenue" will equal your Sales Price. If it stays on the balance sheet, your Revenue equals Sales Price - Basis. In the end, the net profit will be the same.

[@SydetraGordon-q4m]

just seeing this, sorry! I would prefer to move it to COGS.. just not sure what kind of account I would move it to I actually moved it to Purchase Price COGS account. & revenue will be the sales price property sold after reno right? In your course, do you go over completing taxes from flipping homes/or do any videos related?@@Incomedigs

[@jodypupecki9423]

I added an additional category - 7. Flips - Payroll Expenses. When I go to the project overview that category does not show up in the middle column under costs or expense. How do I get payroll to be included in the overall project report to reflect a more accurate profit at the end of the flip?

[@Incomedigs]

Hi Jody...thanks for watching! First question: What "Account Type" is 7. Flips - Payroll Expense categorized as? Only Cost of Goods Sold or Expenses will show up. Also, does that account have any transactions? Only non-zero values will show up. If there are no transactions for that account/ project, it will not present itself.

[@jodypupecki9423]

@@Incomedigs I checked and it is set up as an Expense > Payroll Expense and yes, the current project has other transactions, I can see the project but not the payroll expenses rolled up into it. Any guidance to get the payroll to roll up into the overall project would be greatly appreciated!

[@Incomedigs]

@@jodypupecki9423 the payroll expenses for the project are likely tied to time entries. Do you have time entries for the project? I would potentially need to see your books and poke around a bit.

[@jodypupecki9423]

@@Incomedigs they are not connected to time entries as far as I know. If you're willing, let's chat offline. My email is [e-mail]. Thanks!

[@czache]

are holdings costs capitalizable? let say

[@Incomedigs]

They can be...I would discuss with your CPA

[@jasonbonde]

What version of QBO do you use?

[@Incomedigs]

Hey Jason...I use QB Online Plus!