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Whether you're are building out a rental portfolio, flipping properties, developing, or running another real estate business, you need to consider the benefits of hiring a CPA. And not just for taxes, mind you.
If you are shopping for a CPA, keep the following in mind. Make sure to ask for examples during the initial consultation.
Hiring a CPA will reduce your tax liability
Don't roll your eyes, this is an important point. A CPA with a tax specialty will know the tax code and regulations inside and out. They will be able to offer advice regarding the minimization of your tax liability by taking all the deductions you can legally take.
New clients who haven't previously used a CPA tend to benefit immensely during the first year. This is because the client has generally not been operating in a tax efficient manner.
For instance, I'm a CPA for real estate investors and I absolutely love assisting flippers, developers, and realtors who either haven’t previously hired a CPA, or accidentally hired the wrong one. Reason being that when I call them up and explain I've found a way to save them $5,000 - $10,000, they're going to think I'm awesome and they will be a very loyal client going forward.
Now if we look at it on the flip side, not hiring a CPA (and a good one at that) can literally be costing you thousands of dollars. Don't make that mistake!
Hiring a CPA will help grow your business
CPAs are usually classified as "tax experts" whom you visit once per year to hand over a bunch of your documents. Sound familiar? This shouldn't be the case and if that describes your CPA, consider shopping around for a new one.
Good CPAs will indeed be tax experts in their niche. Great CPAs will bring business and financial knowledge to the table. Ideally, if you need help learning how to streamline your business as it grows, your CPA is likely the most capable to assist you for two primary reasons: (1) they know your business and (2) they should have other clients with similar needs.
For instance, our CPA firm for real estate investors can advise you all day on tax issues. We'll educate you on what you can and cannot deduct, we'll help you craft tax strategies, and we'll most certainly prepare your tax return. But we add the most value when we are helping you automate, streamline, and grow your portfolio or businesses month after month. While the value may be tougher to quantify over literal tax savings, our client satisfaction has improved dramatically.
Your business is made up of tiny sub-processes. Which ones are you great at? Likely not taxes and accounting otherwise you wouldn't be reading this article. You need to figure out how to streamline the parts you're not great at to free up time to focus on what you are great at.
A great CPA will be constantly experimenting with their own business. This could be as simple as introducing a new product or as complex as overhauling a pricing model. The point is that a CPA who experiments with his/her own business will more than likely pass the knowledge on to their clients. That's a true business advisor and one that you want need on your team. At least that's the way we operate.
And think about it like this - if you are new to business or real estate investing, who better than to get a CPA on your team and quickly? You are tapping into deep business knowledge and expertise that will likely help you grow much faster than you can on your own.
Hiring a CPA will reduce stress
It's easier to sleep at night knowing that a professional has your back. Whether it's trying to navigate through complex business planning and entity structuring laws or handling IRS inquiries, when you've hired a professional to assist you, the whole process becomes much easier.
I can visibly see the stress leave my clients after a meeting (video meeting 'cause we're a virtual firm) in which we lay out a plan to tackle the problem at hand. It's highly rewarding to be in a position to add intangible value to a client caught up in a complex situation.
The key here is to not wait until it's too late. I've had clients come to me while the IRS is knocking at their door to seize their assets. Don't put yourself in that type of situation and seek help early.
Enough of the self promotion dude!
I know, this was my first post ever for The Real Estate CPA™ so I had to indulge a bit. To be clear, we have become very selective with the clients we are taking on as we have a specific growth plan that we want to follow. Even though you may not qualify as a client for my firm, I still believe it is absolutely essential to have a great CPA in your corner.
It doesn't matter whether you hire me or another CPA. The key is to hire one sooner rather than later. Hire a great one and make sure they are going to help you reduce your tax liability as well as grow your business.