What is the best way for a partnership to handle the checkbook?

[fastfredracing]

Our rental house business is now no longer a little hobby biz. We have 5 houses going, and there is real money to deal with now. My partner has generally handled the bills up to this point, but after looking over the statements, there is no way I can blindly let him have the wheel. I would be the fool if I don't keep an eye on the money.
I am thinking that auto bill pay for all fixed expenses, and then two signatures required on checks would be the only fair way to eliminate any , and all future disputes about money.
Any other good ideas?

[recycled sixtie]

From the accounting courses I have done, it is essential that you know what the other partner is doing. You are making moves to be more assertive, that is autopay for fixed expenses and your two signatures on the cheques. It is essential that u understand each other because disagreements can occur. My wife and I are partners in a condo we rent out. Our rent goes in a joint account, all expenses/tax deductions go in one envellope. It is unfortunate that u have to have a partnership to make a go of it. If you had 2-3 houses each instead of 5 between u, administration on a one owner basis would be a lot simpler. Sorry to be so negative about partnerships and I don't want to sew any seeds of doubt in your mind. I tend to be a loaner in this regard. Access to all accounting books/software should be available to both of u.
If you don't understand the accounting/admin. side,
take a course so u can understand it.

[john70t]

Not a lawyer or businessman....but writing, notarizing, and filing a contract(or whatever the articles of a partnership are called) with the city/county/state registering board would put all the agree-upon rules on the table.

There might also be stipulations for procedural events should either partner neglect their duties i.e.:
-rights and expected duties of each partner, or
-separation of personal and professional obligations, or
-required meetings, or
-one is out of country and can't co-sign the checks so..., or
-the book keeper isn't being current and an agreed professional will be used so..., or
-any amount spent on X over $Xdollars needs dual authorization, or
-in event of total fallout, an arbitrator or specified group will first be utilized before the lawyers come out.

Having a business plan where the division of the money earned and self-repayment of the money invested makes things fair for each and trackable.

Not sure, but aren't members of a partnerships jointly and severally liable?

[LeeH]

Are you using QuickBooks? Enter every dollar in, every dollar out. Know the reason for every debit. Reconcile every month when the statement comes out. If the account doesn't reconcile, figure out why.

[Zeke]

It's time for a much more comprehensive agreement well beyond the scope of banking.

[lynnmacer]

Reconcile every month when the statement comes out.

[Esel Mann]

Firstly, each of the people who have a stake in the operation should be active in participation. Being active in participation, each of the people who have a stake in the operation will know what's going on.

I presume that you have an organizational set up as well as operating agreement which is acceptable to each of the people who have a stake in the operation. If you don't, I hint towards rectifying this. Fast.

If you don't trust the other(s) who have a stake in the operation, sorry to tell you this but (a) you are then in the seat to handle all the financials (if you aren't doing so now you need to do so fast) and (b) you need to ensure you have majority vote, and (c) if you are taking this responsibility all of the sudden and pissiing off the other(s) you need to be in a position to buy them out.

[recycled sixtie]

I have checked my accounting book and it states that a partnership agreement should be written up with a lawyer. If your partner resists, then you may have a problem. I am not an accountant or a lawyer. One of the above posters mentioned liability. While u are at the lawyers drawing up the agreement, ask about the liability implications. Heed the saying, if you fail to plan, you plan to fail.

[Bill Douglas]

Originally Posted by fastfredracing

I am thinking that auto bill pay for all fixed expenses, and then two signatures required on checks would be the only fair way to eliminate any , and all future disputes about money.

Oh please do. I've heard too many sad stories recently to trust anyone. Well I sort of trust my GF, and if she does anything wrong I'll make her make it up to me even though it's not my birthday.

[regency]

I agree with LeeH. We have a partnership in a Commercial building, our partnership rents space to our separate businesses. It's all on QuickBooks, all income ( rents ) and all out go ( bills / mortgage pmts ). is right there, balanced every month. It's not complicated but its also not too big either.

Steve

73 911 T MFI Coupe, Aubergine

[ShakinJoe]

You hire an accountant to do this. It s cheap.

[Superman]

Originally Posted by ShakinJoe

You hire an accountant to do this. It s cheap.

And you audit the accountant.

[LeeH]

Originally Posted by ShakinJoe

You hire an accountant to do this. It s cheap.

What do you consider "cheap?"

[fred cook]

My sister and I are partners in owning a commercial rental building. We have owned this property for about 34 years. She is in the banking business and is better trained/more comfortable taking care of the checkbook and keeping the records balanced while I am more capable of managing the physical property, looking after the mechanics of the building and acquiring new tenants when needed. The associated checking account is available to both of us to view online at anytime. The most important things are communication and trust. We discuss issues before spending any money and both know when major bills such as taxes and insurance are due. She does her part, I do my part but we both are aware of what the other is doing. Not complicated, no double signatures required, etc.