Where to Enter Your Equity and Proper Use of CASH from Me
- with a dose of Crazy Advice from an Incompetent CPA
Question from Cassandra:
Hi Mike, I’m really enjoying your QuickBooksForInvestors system!!
Here’s my question….
I have heard you say you don’t bother with the Owner Equity account cause you let your CPA deal with that.
- Correct, none of your equity is entered into Investor Books
- You enter MARKET VALUE on your personal financial statement outside of Investor Books Pro
- Don’t worry, it drove me bonkers decades ago.
- Your equity, market value has no place in your Investor Books
- WHY? – because Investor Books is YOUR BOOKS for your Real Estate Business to measure your balance sheet, profitably and is used to do your Tax Returns to IRS.
You say you use the “Cash from ME” (Long Term Liability) account when you infuse money into your business.
For short term interest-free loans to my business, this concept makes sense to me. But, if I
infuse (Bad Word Cassandra) LOAN money to my real estate business to buy a property, I believe my CPA will complain because this Long Term Liability has no terms such as interest rate and loan period.
- HorseCrap – get another CPA – they work for YOU Cassandra
I’m also reading the IRS can easily challenge this and force me to treat it as equity.
- Ask a COMPETENT Real Estate Investing EXPERT CPA – insane
My LLC expects to pay this
infusion LOAN to My Real Estate Business back once I sell the property several years down the road. So, how do I justify using a Long Term Liability account when there are no loan terms?
- Unbelievable! Do you really want to charge your real estate business “Interest” and then you would have to report the interest earned as INCOME for the IRS?
- Your CPA does not understand Mom and Pop real estate investing
- They are doing a great job of getting you to drink their nasty Kool-Aid.
Also, how do I explain this showing up on the balance sheet as a long term liability when it is not a loan with terms?
- Just like the account says “CASH FROM ME” is a long term liability account where you loaned your personal money to your real estate business.
- You Do NOT Need Terms – Fire Them and get a competant CPA who understands real estate investing.
Please Remember Cassandra,
Veterinarians and Brain Surgeons are both called “Doctor.”
Which one do you want to work on your noggin?
Thank you, Cassandra