Troisky Blog

I know there are a bunch of other things Real Estate Investors would rather do than work on sorting out receipts, cleaning up the books, and looking over taxes.  But when your real estate investment career starts taking off, one of the things that get left behind is how you are going to take care of your books so that your financials are all in order.  It's important to keep on top of those things and don't let that fall behind.  Playing catch up with receipts, bills, invoices is no fun and stressful. It can also be expensive too when you have to work with CPAs and book keepers to help you straighten it out. 

So Below is an email I got from my accountant about keeping receipts and things to do to avoid the accounting and tax nightmares for real estate investors:

  

"Hi everyone,

As we start to work on these properties, here are a few general guidelines to keep in mind that will help simplify the accounting process:

1. Receipts, receipts, receipts. Always collect receipts when purchasing materials or paying contractors.
2. Collect W-9 forms prior to making payments to contractors. Avoid cash payments but if you have to make sure they signed for it. 
3. Avoid using contractors that refused to provide W-9 but if you do use them, do so for small jobs totaling under $600 per year to avoid paperwork.
4. Invoices received from contractors should include both labor and materials. We don't need to collect their receipts, the invoice is sufficient for our tax record. You may still want to ask for copy of receipts to verify the charges but we don't need to keep them. They will be 1099 for total payments including materials at the end of the year. 
5. If anyone in our group purchased materials or paid contractors, make sure to submit for reimbursement weekly. You don't want to wait too long as you may misplaced/lost receipts. 
6. If you're buying materials for multiple projects, split the purchases and pay for them separately.

Hope this helps. Let me know if you have any questions."

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