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April 8, 2022

Why We File Tax Extensions for First-Year Clients

If you reach out to our firm in January, February, March, or any other common time of year to inquire about tax services, we will probably file an extension. We file extensions for first-year clients for a few reasons. Read on to learn what they are.

4 Reasons for Filing Tax Extensions for First-Year Clients

There are four key reasons that we will file a tax return extension for year one. Our goal? To set you up for success.

1. Quality Control for an Excellent Customer Experience

A primary objective of our firm is to provide an excellent client experience. That means not just rushing through to get your taxes on paper and file them away. Many accounting firms do operate that way, but we like to take our time and consider year one to be the first stage of a long-term relationship.

Quality control is part of the reason we file extensions for first-year clients. This is similar in reasoning to why we don’t just file tax returns: it requires a lot of foundational knowledge to adequately prepare taxes, and we don’t want to miss any opportunities to save you money.

When you first come on board, we know nothing about your situation. All of our services — from accounting services to Tax Advisory Services — come with some kind of one on one meeting. This is because we can’t steer you in the right direction without knowing you. Tax filing is no different. It’s a process, and that process takes time. For that reason, we extend your tax return so we can take the right amount of time to get to know you.

2. Your Tax Situation is Going From Basic → Complex

Most of our clients seek out a real estate CPA because their situation is shifting from more basic to more complex. As the complexities of being a real estate investor increase, so does your tax situation. It’s important that you work with a real estate accounting specialist, because we have seen situations like yours before. Once we understand your current state and business goals, we’ll be able to create some sound strategies for saving money on your taxes.

Our team will take time reviewing all of your business practices and documents. First, we want to make sure you have your ducks in a row to file taxes the right way. Second, we want to make sure that we, as the firm filing your taxes, don’t leave anything to chance. All of this is made possible with a little more time, which is why we file extensions for first-year clients.

3. Prevents Errors

A third reason we favor an extension is to prevent errors. The less time an accountant has to review your business and documents, the more likely they will miss important information. This may not even be a legitimate oversight or error, but just something lost in communication or something you didn’t know to tell us.

Rushing will only increase this risk, and errors also increase your chances of an audit. That is an audit that could have been prevented if things had been done right the first time.

4. Alleviates the Burden of Deadlines for You

If your real estate business is growing fast, you are already under a lot of pressure. Taxes may or may not be familiar to you, depending on how long you’ve been in real estate investing and what other kinds of experience you have. If you contract with us for tax services and then get on a rapid-pace process for filing, you’re going to add pressure to your life. We’d rather not do that, giving you more time to get us everything we need to file your taxes the right way.

How Does Tax Filing With Us Work?

To get taxes done the right way the first year you work with us, here’s the protocol we’ll follow:

  • Discovery phase, where we have a one on one interaction with you and get to know your situation, goals for the future, and create a plan to minimize your taxes. Through this process we learn a lot of foundational knowledge of your situation, which leads to a higher quality outcome when preparing your returns.
  • Document requests and collection. Based on our initial conversation and the information you share, we will know the documents we need to get from you to put your taxes together. We’ll create a comprehensive list of everything we need and send it over to you. Then, you put all of those documents together.

Keep in mind: you may be investigating a real estate CPA because your situation is growing in complexity, which also means you’re graduating into a new realm of bookkeeping needs and compliance. You may need guidance in all of these arenas, and tax time is a good opportunity to identify any gaps and get some advice for structuring things better for year-round tax planning.

  • We assemble your tax return, creating everything from scratch (which takes time), ensuring you are maximizing deductions and recording everything with absolute precision.

Every step of the way, we are here to help answer questions, knowing that you need full clarity into the process. The extra work this first year sets us up for an easier time in the years that follow (and we hope there are many!).

First-Year Client Tax Extensions

To sum up, we file first-year extensions to support a great customer experience, ensure we fully understand your situation, save you as much money as possible, avoid errors, and make your life easier. 

The first year you work with us will be the steepest learning curve. Once it flattens, an extension is typically no longer needed because we will already know how your business works.

Our firm enjoys long-term client relationships, and the first year is an important one. If you’re ready to get off on the right foot with a firm that truly cares about you, contact us today.