Books for Several Apartment Buildings and Several LLCs: One Set per Building and One View of the Whole

What does keeping separate books for several apartment buildings mean?

Separate books mean each apartment building has its own bank account, its own tag on every transaction and its own profit and loss. A combined report then adds the buildings up without mixing them.

With one blended account, the bank balance is the only number you have, and it belongs to no building. With separate books, every dollar sits with the building that earned it or spent it, and the whole still adds up on one page. Keeping buildings apart is one rule of apartment building bookkeeping.

Does each apartment building need its own bank account?

Yes, for clean books. One bank account per building keeps each building's cash apart. Each account can then be reconciled on its own, and no building pays another's bills unseen.

Our 5 board buildings have 5 operating accounts, one in the name of the LLC that owns each building. A building that holds tenant deposits in a separate account keeps that account under the same building.

The 5 board buildings, invented data

Each of those accounts is checked every month in bank reconciliation for an apartment building.

Should each apartment building have its own LLC?

Whether to form an LLC for each building is a legal question for your attorney. In the books, every LLC that exists gets its own set of records and its own balance sheet.

An LLC owns its own money and owes its own debts, so its books must show both without another LLC's numbers mixed in. If 2 buildings sit in one LLC, that LLC has one set of books and one balance sheet, and each building still has its own bank account and its own tag. How an LLC is taxed is a question for your CPA.

How do you organize the books when several LLCs own your apartment buildings?

Keep one set of books for each LLC, one bank account for each building and one tag for each building. Use the same chart of accounts everywhere so the reports line up.

The tag does the daily work. Rent from Oak St is tagged Oak St. A repair at Cedar Ln is tagged Cedar Ln. At month end the tags sort every line into its building. The one list every building shares is the chart of accounts for an apartment building. Same account names and numbers in every set of books, so the 5 reports read the same way.

How do you split a bill shared by several apartment buildings?

Pick one rule and keep it, such as unit count. A $900 bill for 5 buildings with 90 units is $10 a unit, so the 12-unit building carries $120.

Here is one $900 bill that covers all 5 buildings, split by unit count. The rule is written down once and used every time, so the split needs no new decision each month.

A shared bill split by unit count, invented data

Wages for staff who work at more than one building are split the same way, covered in on-site payroll for apartment buildings.

How do you record money one apartment building's LLC pays for another?

The LLC that paid records money owed to it. The LLC that benefited records the cost and the money it owes. When it is repaid, both balances return to 0.

In the example above, Elm Ave's LLC pays the whole $900. Its own share is $240. The other 4 LLCs owe it $660. That $660 is not an Elm Ave cost and not Elm Ave income. It is money owed back.

The LLC that paid, Elm Ave, invented data

An LLC that benefited, Oak St, invented data

When Oak St's LLC sends Elm Ave's LLC the $120, Oak St's amount owed goes to 0 and Elm Ave's amount owed to it drops by the same $120. Once all 4 have paid, both balances are 0 and each building carries its own share of the cost. Money that leaves an LLC for its owners is a different entry, covered in owner draws and partner distributions.

How do you see all your apartment buildings in one report?

Run a combined profit and loss with one column per building and a total column. Money the LLCs owe each other is left out of the total.

The tags make the columns. Here are the first 2 lines of the combined report for the 5 board buildings, with rent if full at $1,450 a unit.

Combined report, the 5 board buildings, invented data

The $660 the 4 LLCs owe Elm Ave stays on each LLC's own balance sheet. It is left out of the total column, because the 5 buildings as a whole owe it to no one.

Each column ties to its own bank account, so every building's number can be checked against its own statement. Each column is one building's monthly report package for an apartment building.

Who should keep the books for several apartment buildings?

An in-house accountant, an outside bookkeeper, or the manager with an outside check. The choice depends on the number of doors and on who records the transactions today.

Whoever keeps them, the 3 rules hold: one set of books per LLC, one bank account per building, one tag on every transaction. Who should do this work is weighed in in-house property accountant or outsourced bookkeeping.