April 24, 2024

The Domestikated Life

One Passion

Turbo Tax Small Business – A Good Accounting Tax Filing Solution For Small Managers and Owners

Operating rental properties and especially a portfolio of rental properties can result in snowballing charges for legal fees and accounting. Managing these costs, supporting your needs the right way, protecting your investors interests, protecting yourself against liabilities is a tremendously challenging requirement that requires understanding where you can “self serve” and how you can accomplish this end while keeping the service quality bar high enough for everyone involved. Turbo Tax Small Business is one of these solutions.

Making Turbo Tax sufficient without significant accounting support requires some good planning. First, as I’ve mentioned before a good ledger system that records all transactions before being entered into the property management and accounting system is a great start. If each transaction is recorded with the date, a detailed purpose, and the type. Your books can be quickly assembled by yourself if you have the accounting skills and understand or go to the trouble to understand your software well enough.

With an accurate detailed income statement, balance sheet, and cash flow statement, you have the basic information you require for the financial input of your tax preparation.

Next, you need to have all the entity information at your finger tips. For tax preparation, this includes the tax ID number or EIN for the entity. You need to know your entity type. You have to be prepared to answer questions like whether this is an S Corporation or Limited Liability Company (LLC) or partnership. You need to be able to answer whether the company is a single partner or investor or multiple partner or investor business. Finally, you have to the formation date of the entity.

For the states, you will need to know similar information and states have state specific entity information which you will need to have.

Next, you need to have the investor tax information. This is simply the name of the entity or individual. Their Tax ID number. (If you have foreign investors, you should have a tax id and if you do not their is a process for them to file with IRS to get an ID. You will require their address and a copy of their passport. They will need to complete the W7 for this purpose.) Then you will need the address for each individual.

With all this information in hand, you have everything necessary to complete your taxes. As a matter of organizing, you will need to have the date of investment and subsequent investments for each investor. You will need the same for distributions. Once organized and assuming you have (or the person you have perform the work has) the accounting experience you can prepare an accurate tax return that will satisfy the IRS, your partners, and protect everyone’s interests.