Many real estate business are not one man operations. If you have a business partner for some or all of your properties, be sure you enter reimbursements correctly.
Q: Some of our properties are co-owned with a business partner. What is the best way to list his company as well as the reimbursements and payments made to him?
A: Different tax laws apply to various business entity. It is important that the entity you select when setting up your QuickBooks file corresponds to your company’s organization. From the Company menu, select Company Information to choose your entity type.
A partnership is similar to a sole proprietorship, except it has more than one owner. Income in a partnership flows to the individual partners and is taxed as personal income.
When your business partner receives reimbursements or payments, use the above account to track the funds. Indicate the Class on all transactions to track the expenses for each property. Once the necessary amounts have been transferred or returned, write a check for the total amount of the bank account taking the balance to ZERO.
In order to correctly account for each partner’s investments and draws, you will need additional accounts.