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Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: FastStache on February 02, 2014, 11:35:25 AM

Title: How to keep track of expenses for taxes? Gnucash?
Post by: FastStache on February 02, 2014, 11:35:25 AM

I'm going to have a rental this year and I was trying to figure out what is the best way to keep track of expenses for tax purposes? I currently use YNAB for tracking expenses, but I saw GnuCash is more of an accounting software package.

Any good books on the subject or software recommendations?

Title: Re: How to keep track of expenses for taxes? Gnucash?
Post by: Cyrano on February 02, 2014, 03:47:48 PM

I like GnuCash for household and small business finance, but regardless of what software you use, get a separate bank account to pay the business expenses and deposit its income.

Title: Re: How to keep track of expenses for taxes? Gnucash?
Post by: FastStache on February 02, 2014, 09:04:31 PM

Good idea on separate accounts.

Title: Re: How to keep track of expenses for taxes? Gnucash?
Post by: the fixer on February 03, 2014, 12:54:59 AM

I use gnucash for my self employment. I created a completely separate set of books from my personal accounting, which relies on having separate asset and liability bank accounts/credit cards. All business income goes into my business account, and from there I can make transfers to my personal. When I do this, I have to double-enter the transaction in each set of books, but it helps to keep business income and expenses totally separate.

The only business-specific functions I've used with gnucash is invoices (best doc I've seen is http://linas.org/mirrors/www.aerospacesoftware.com/2003.06.21/GNU_Cash_for_Business_users_Howto_Guide.html), which won't apply to managing a rental.

The only other advice I have: come up with a logical way to organize your business expenses, but don't expect it to mirror your tax return exactly. For instance, if you have an expense that is not 100% business related, you can't model it perfectly. What I do is have all my expenses that I consider business-related done on the business side, then I can review them at the end of the year to figure out what qualifies for an IRS deduction, for how much, and make sure I have the required documentation.

Title: Re: How to keep track of expenses for taxes? Gnucash?
Post by: MustachianAccountant on February 03, 2014, 07:04:06 AM

If you just have one rental with very little activity (a few transactions a month), and you didn't set up an LLC for the rental, then Excel should be able to handle it just fine.

Title: Re: How to keep track of expenses for taxes? Gnucash?
Post by: FastStache on February 03, 2014, 07:13:32 AM

My plan is buy another home and rent out my current place.

I haven't decided whether to do an LLC or not.

Title: Re: How to keep track of expenses for taxes? Gnucash?
Post by: aj_yooper on February 03, 2014, 07:43:43 AM

I read that Jesse, founder of YNAB, keeps his company books on YNAB.  You could just set up a second budget for your business expenses.

Title: Re: How to keep track of expenses for taxes? Gnucash?
Post by: b4u2 on February 03, 2014, 08:42:05 AM

I have one rental and I just put everything in a large envelope. There are not many transactions with just one so not hard to keep up with.

Title: Re: How to keep track of expenses for taxes? Gnucash?
Post by: MustachianAccountant on February 03, 2014, 08:57:46 AM

Quote from: FastStache on February 03, 2014, 07:13:32 AM

My plan is buy another home and rent out my current place.

I haven't decided whether to do an LLC or not.

Even with two rental properties, you're not going to have a lot of activity. And if the LLC would be single-member (just you), then Excel can still handle it. You basically need something to track your income and expenses... even the envelope suggested above works fine. Get a large manila envelope, write date and amount of income/expense in a list on the front, and stick receipts inside. Bam.