One bank account for two rentals, or one each?

Question

Two single family rentals, both closing under the same LLC. I read a thread where someone said you don't need separate bank accounts per property because you can use class tracking in QuickBooks and get the same result, and someone else in the same thread said that's commingling and you'll regret it. I don't actually know what either of those words means well enough to tell who's right. Right now everything runs through one checking account and I pay the plumber from whichever card is in my wallet.

Rena Guide · Accepted Answer

Two different things are getting mixed together here, so let me split them.

Class tracking is a software feature. You tag every transaction with a label, in this case a property, and the software can then produce a profit and loss statement per property out of a single bank account. "Classes" is the QuickBooks word for it; other programs call them properties, tags, or locations. It does genuinely give you property level reporting without separate accounts, so the first person you read wasn't wrong about that.

Commingling means mixing money that belongs to different legal owners. Your personal money and your LLC's money in one account is commingling. Two properties owned by the same LLC sharing one account is not, because it's all the same legal owner. So the usual line people draw is one operating account per legal entity, with class tracking inside it to split by property. If you later put each house in its own LLC, each of those needs its own account, and whether that separation actually protects you is a question for an attorney in your state.

The card in your wallet is the part that will hurt. Paying the plumber from a personal card and reimbursing yourself later is fixable but doubles the work, and if it's a mixed personal and business card you're now reading line by line at year end. One dedicated card for the LLC costs nothing and removes that entirely.

Security deposits are worth asking about separately. Some states require deposits to be held in a separate account, sometimes an interest bearing one, and the rule varies state to state.

priya_n21 · Answer

On the deposit thing, my state's landlord tenant statute says the deposit has to sit in a separate account and I have to tell the tenant which bank inside 30 days. So that's a second account whether I wanted one or not. Also stop taking rent by Zelle if you can, @compass. Mine comes in with no memo line half the time and I can't tell a rent payment from my sister paying me back for dinner.

One bank account for two rentals, or one each?

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