Trying To Get My Records In Order
This may be a stupid question but I am unsure about this and want to make sure I record everything correct in my record keeping.
Are mortgages on investment properties considered assets?
How about equity line of credit, would that be an asset?
Also credit cards, should that be placed under assets also?
What would liablities consist of?
Thanks for your help.
Unless you are a bank holding the debt none of these things are assets, they are all liabilities. The assets are the land/buildings on which the mortgages are placed, the durable goods you bought with the credit cards, etc.
Hello
It is certainly not a stupid question. One of the worst mistakes I ever made after forming a coropration was not being familiar enough with how to record expenses in order take full advantage of deductables on taxes. Our accounting firm (one of the largest in the state) did not offer any advice at the start (I realize it was not their place as they had not been contracted to do so) and I kept up with things in a spreadsheet, but didn't have a clear picture of the variety of columns needed so that my taxes would basically be "done" at the end of the fiscal year. I took my books to my accountant and he just takes what I've given him and adds it up. He did not disect and check that each entry was properly placed or an allowable deduction was taken. I was floored by what he said was owed. I filed an extension and took a "self course" on allowable deductions and entry accounting. I went back to him with a savings of several thousand dollars. He verified that all were legal and allowable deductions. Now my accounting structure is correct for my business, I know about where my tax situation stands at most times, and I do not have a pile of work to do come tax time. This is probably more advice than you wanted, but I wish you an easier start than I had.
As to your questions, there are several parameters to each situation. My opinion it would be well worth your money to consult with a real estate accountant who specializes in rei so your bookkeeping system will be a breeze and grow with your business. And like you are doing by seeking your own answers, there is no substitue for knowing your own business inside and out. No matter how good an accountant (or other source of information) is, it isn't his money or his liability.
You may want to buy a good accounting software. But at least download or pick up (free) the IRS publications pertaining to what you are doing, and they will help you define terms and establish your accounting system. Kind of like working backwards before you begin so you'll know what you're working toward.
Happy researching,
Terry
your list is all debt therefore a liabilty.....kenmax