Rebuilt the chart of accounts across three entities. Month-end closed in four days.

Month-end closed on the fourth business day in October. First time in two years that's happened, so here's how it actually went.

Starting point: two LLCs holding small commercial (a 6,400 sq ft flex building in a second-tier midwest market, and a two-tenant retail strip), plus a third entity that only holds two LP interests and a checking account. Books were in one file with everything under "rental income" and "repairs." No property-level anything. My bookkeeper was charging $650 a month and doing exactly what I'd asked for, which was data entry.

The rebuild took six weeks and cost $2,800 as a one-time project. What we actually did: separate company file per legal entity, then classes per property inside each file, then a real chart of accounts that splits repairs from improvements at the point of entry rather than in March. Every fixed asset got its own sub-account with the in-service date sitting right there in the description field, because I got tired of digging through closing statements to reconstruct a depreciation schedule my CPA had already built once.

The part that nearly killed it was the closing statements. Both buildings were bought before I cared about this, and the original entries dumped the entire wire amount into one asset account. Untangling prorated taxes, the title fees that belong in basis, and the escrow deposits that were never assets at all took eleven days of the six weeks. I paid for that hour by hour.

Ongoing cost went from $650 to $1,150 a month, and now includes a reviewed P&L by property and a balance sheet I can hand a lender without apologizing.

What I'd keep: paying separately for the cleanup as a project. Blending it into the monthly fee hides how long it really took.

Answer

1tonyv88SO4CPRO6

What happens when that bookkeeper quits?

I ask because on the management side I've watched three owners go through this exact rebuild and then have the whole thing degrade in five months because the person who understood the class structure left and the replacement started putting everything in the default account again. The structure only holds if the rules for it are written down somewhere other than in someone's head.

Other variable I'd push on: what if one of those buildings had a PM in the middle? You're getting bank statements directly. The moment a manager sits between you and the tenant, your income line becomes a monthly owner statement that nets out repairs, management fees, and sometimes a reserve draw, and half the systems out there export it in a format nobody can import. My owners who insist on gross income and gross expenses on their own books end up paying their bookkeeper to re-key the statement line by line, which is another two or three hours a month per property. Worth knowing before you buy the third building.

2 replies

1ryanmck27SC2C

The eleven days on closing statements is the part I'd flag for anyone reading this and thinking six weeks sounds fine.

I've been doing cleanup work as part of getting my own service side going, and the closing statement is where every single job blows its estimate. The reason is that the settlement statement has maybe forty lines and only about six of them are actually the purchase price. Prorated property taxes get credited or debited depending on who paid what and when, and in some states the county bills in arrears so the proration runs backward from what you'd guess. Some title and loan fees go into basis, some get expensed, some amortize over the loan term. Your CPA decides which is which, that isn't a bookkeeping call.

So the thing that made your rebuild work isn't the class structure, it's that you had the original statements to hand. I did a job in the spring where the owner had two of five, and the two missing ones were entities where the lender had been paid off and nobody could produce anything. We rebuilt from the county's recorded deed plus bank memo lines and it was guesswork with a straight face.

One question on the $1,150. Is the reviewed P&L actually reviewed by a person who understands the properties, or is it a report that gets generated and emailed? Because the difference in price between those two is usually about $400 a month and the difference in value is enormous. If a vacancy month shows up and nobody calls you about it, you're paying for a report.

Also, keeping the in-service date in the description field is smart and I'm stealing it.