For smaller shops, what are you guys doing for your accounting?
For those of you on super lean teams, or even if you're a one-man shop, are you doing the accounting yourself or outsourcing it? I'm curious how others are approaching or have approached this. Can some of the accounting be easy to do yourself for a little bit especially if you're in development knocking out your first few projects, or would it be wise to pay someone at the get-go to do it?
Hire a third party accountant to do monthly draws & annual or semi-annual taxes. You control how much they work (and how much you pay them as a result)
Agree with CRE, we outsource to a 3rd party accountant. Our business is small, but the taxes would be too complicated for turbotax. You also want an expert to keep track of all your financials and tax filings in case you get audited
Thanks! For taxes, it definitely makes sense to send that to experts and let them handle it from there. However, for regular accounting and draws I have done some of that stuff in previous roles, and sometimes the workload seems like something i could handle so it's just kind of sparking that idea for me
For regular accounting of each property you can do yourself as you are able. For now, we do it ourselves since it's still manageable
I will echo this. My second year in business I outsourced my monthly accounting which is 95%+ book keeping and draws and my take-aways were:
1. It was VERY expensive for the work being done. I've found that I can sit down for an hour a month and do all of my journal entries since so many of them are repetitive.
2. It wasn't accurate. I constantly had to self audit the entries and make changes anyways.
3. I wasn't getting the attention of level of detail I needed. I decided I really need to get to a size where I can have a Staff and/or Project Accountant internal.
For now I have a firm prepare financials and tax forms every year. But all of the daily accounting tasks are handled internally and as mentioned don't take that much time - albeit it's a PITA and very boring work.
that's true i can control what i give to them. it's controlling some of those initial costs at the start. i know some development and construction accounting already and i could give it a try first and then if i'm i over my head just move it over to a third-party
Hired a third party. Two, technically. One for the property level accounting and then another for the company/personal level (basically the same since it is a passthrough).
Good accounting/bookkeeping is worth its weight in gold. One of those things that feels like a huge drag, but even little mistakes end up being orders of magnitude more expensive or time consuming to fix. Don't cheap out on it.
For a very lean shop, a lot of people handle the basics themselves at first, like invoicing, expense tracking, and bank reconciliations, as long as transactions are still manageable. But once deals, entities, partner allocations, lender reporting, or tax filings start getting more complex, outsourcing usually makes more sense because cleanup later is often more expensive than doing it right early. A common middle ground is to manage day-to-day bookkeeping internally and bring in an accountant or outsourced firm for monthly close, financials, and tax support.
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