I’m always a bit concerned when I read an email or a forum post by a new investor asking about how he should structure his business, how he should prepare his taxes, how he should manage deductions, etc. These are the types of investing tasks that must not be taken lightly, and where a smart investor will bring in a professional to help.
The typical response when I say that to new investors is, “But I can’t afford an accountant!” As someone who has dealt with many different areas of investing over the years, all I can say is, “You can’t afford NOT to have a great CPA and/or tax professional helping you.” Not only will a great CPA help you structure your business in a way that should save you many times his fee, but a CPA who specializes in real estate will likely have a Rolodex of contacts who can help you in your investing pursuits.
So, what exactly will a great CPA do for you? And how can you find one?
To break it down a bit further, a great CPA can provide the following services for you real estate business:
- Help you define the appropriate business structures, both from a legal protection and from a financial/tax perspective
- Help you create a tax strategy for your business that will allow you to legally keep as much money as you possibly can
- Help you make smart decisions with respect to your individual real estate investments
- Prepare your annual tax returns
- Recommend other team members (attorney, insurance agent, real estate agent, etc) who can help make your business a success
With those goals in mind, you should be prepared to interview multiple CPAs before picking one that you will work with; generally speaking, a relationship with an accounting professional is often-times a long-term relationship, so finding the right person early-on is key to long-term success. You can often get good CPA recommendations from other investors in your area, from folks in your local Real Estate Investor Association (REIA), or from other professionals you have a good relationships with (your attorney, you real estate agent, etc).
Here is a list of interview questions that should allow you to help find a qualified CPA who can successfully help you sustain and grow your business:
- What are your credentials?
- What services do you offer?
- What areas of tax and accounting do you specialize in?
- What is your background and do you personally own real estate?
- How would I be able to communicate with you? Can I get questions answered by email?
- Given my circumstances, what business structure(s) do you recommend? Why?
- Can you register the business structures for us?
- How can you help in the various phases of real estate investing (acquisition through sale)?
- Do you specialize in tax strategy? Specifically geared towards real estate?
- How aggressive will you be in helping us keep as much money as possible?
- What tax strategies/issues should I be aware of upfront?
- How often would you suggest we meet to review our progress/plan?
- Do you do tax preparation?
- What software do you use (and expect me to use) to do our accounting?
- Can you help me find other team members (attorney, insurance agents, real estate agents, etc)?
- What is your schedule of fees?
- Do you have references?
Photo: jekert gwapo
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- Finding Your Niche In Real Estate
- Finding a “legit” real estate investing club
- Finding the Poison Ivy Real Estate of Your Investment Dreams
Article Author: 
Joshua Dorkin
{ 5 comments… read them below or add one }
Excellent post, J Scott! Timely too as I actually just met with a new CPA yesterday….and looking at your list of questions reminds me of something I failed to ask and should have. Thanks pal!
A good CPA that is and expert in real estate investing will save you a lot of money. Don’t be cheap when looking for a good CPA.
.-= Jason Wheeler´s last undefined ..If you register your site for free at =-.
A real service to BiggerPockets readers/members. Pure gold.
Bear in mind that CPA network affiliate managers have to filter out those people who they feel will not represent very well both their business or their vendor’s businesses. They will want to do a short phone interview, most of them anyway, but no matter what you need to give them your phone number. This is extremely important because if they don’t see a phone number, you’ll most likely get rejected. Part of the assessment process is to do a phone interview in which they will verify some information, but they’re also evaluating you by talking to you, personally.
You make some excellent points.