Accounting and bank accounts. Whats the approach to manage SPE's ?
Hi. I am building an accounting software for a real estate investment firm based in NYC. They told me that they create single purpose entity for each project. Let me know how do you handle this - 

How do you handle Single Purpose entities, do you create there own bank account. If so then payments to contractor are made by company bank account or SPE's bank account? Are rents received in companies bank account or SPE bank account.

These questions are important for journal entries and accounting. Whats the standard approach ?
[{"id": "h1m3qga", "text": "You really need to be asking this to a CPA or attorney or both but everything for those properties goes through the SPE. Rents are deposited in the property bank account and payments are cut from those accounts as well.", "replies": [{"id": "h1m47nm", "text": "This will make the main company just an investor and the property will be treated as independent company. Thanks for the information, this will do for now. Really appreciate your help", "replies": [{"id": "h1mflct", "text": "Everything above is correct. To add a little more, the property will just likely have: an operating account and reserve accounts. Your day to day expenses (and most likely debt service and taxes too) will be paid from operating. These costs will be booked and coded to a GL. The reserve account will usually have specific terms about when cash can be released. All of this will happen at the property level. The main company will simply be the manager (or controlling interest) in the SPE.", "replies": [{"id": "h1mhwfx", "text": "Thanks, nola78 for your explanation. Greatly appreciate this.", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "h1mbpz3", "text": "Look at the loan docs. If you need financial statements for the SPE, it is easier to have its own bank account.\n\nAt the same time, if you're asking these questions, you probably aren't qualified to set up anyone's accounting systems. What software are you attempting to set up?", "replies": [{"id": "h1mgfjq", "text": "I am building a fresh one from scratch, which is a very small part of the software I am building. I knew that separate accounting for SPE was an option, I wanted to know if it is a common practice.", "replies": [{"id": "h1mhivj", "text": "More common than any other way of doing it. By fresh one from scratch what do you mean? There are so many cheap systems out there that work great. Already made for property accounting.", "replies": [{"id": "h1mj462", "text": "I am a programmer. I am building an ERP for CRE investors. This was just a feature requested by investors. As the product is still in development, I can't talk about it further.", "replies": [{"id": "h1mjbob", "text": "Good luck with that!", "replies": [{"id": "h1mjq05", "text": "Thanks Man :)", "replies": [], "depth": 6}], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "h1olznv", "text": "This is solely dependent on how the loan documents are written (presumably the reason for the SPE) and any additional regulations the property or parent may be subject to (like HUD for certain affordable properties). You very well could use a centralized cash account for operating purposes, but might be bound by agreements to have a standalone account. Your reserves, if any, could potentially be held with the lender as this is typically their preference or might be owner held. No one size fits all, very situationally dependent.", "replies": [{"id": "h1pjumq", "text": "I think it's important to implement both patterns and provide flexibility for different situations. Thank you for your input.", "replies": [{"id": "h1rd0cf", "text": "&gt; I think it's important to implement both patterns and provide flexibility for different situations.\n\nI'd focus on flexibility.  People do this very differently depending on lots of things.  Also companies have 'one off' projects that break how they do this sometimes, for example if they go from gp to lp, or there are different investors, etc.  \n\nThe best you are ever going to get on this is \"well this is the most common way but.....\"\n\nFor example for your contractor question, whether you are talking 1st or 3rd party can make a big difference.....  Also shit you don't expect, like one company I worked for would do spe but accounting/banking is generally handled at the PM ownership level for banking then redistributed, except for contractors like say Home Depot who extend credit then it made more sense to have 30 home depot accounts rather than 1 because they want to run the balances up and you get more credit that is locally managed that way (so for example one property doesn't cause an issue with another buying supplies).  Anyways thats a long way of saying be flexible", "replies": [{"id": "h1rf66e", "text": "I wanted to make this easy for everyone, but i guess firms can handle making correct journal entries. I don't need to prescribe.  Anyways thanks for your input.", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "h1r5k2z", "text": "A real estate investment firm with enough coin to hire you will have a more complex approach than simply one account for each SPE.\n\nRecurring expenses and rents will flow through the SPE operating bank account. Nonrecurring expenses (like repairs, legal, closing costs, consultant fees) may flow through the SPE\u2019s parent company, or even a related entity under the parent company. It\u2019s also typical for multiple SPEs to share the same tax ID number, so keep that in mind too.", "replies": [{"id": "h1r7kdv", "text": "Lol This keeps getting more complex.  I went through your posts, I would love to have your opinion on the product once it's finished 1.5 months. Anyway thanks for your input. Appreciate it.", "replies": [{"id": "h1rlpow", "text": "Happy to give you my input. Good luck!", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "h37ifyf", "text": "We typically have 4 accounts per SPE:\n1. Operating account (all cash flows through here, Capex reimburses to this account, any excess over our baseline number gets transferred to draw) \n2. CapEx Account (this is our capex/improvement budget, at the end of each month we see our total Capex expenses from the month and transfer than amount into the operating account)\n3. Escrow account (transfer from the operating account all funds needed to be held for annual payments, I.e. taxes,insurance, HOA..)\n4. Draw account (all distributable cashflow that is transferred from the operating account each month)", "replies": [], "depth": 1}]