As a Real Estate Investor what can you do to be prepared for your CPA?

Sometimes we as Real Estate Investors only ask what can a CPA do for us? That answer put into simple terms is that a CPA can be a valued addition to your team and can help with tax planning, tax filing, business analysis, bookkeeping and other consultation needs. I’m sure we could spend hours talking about the added value that a CPA has provided you, heck I think there was a recent thread on it!

As a CPA and Real Estate Investor, I get to see this from both sides so I’d like to share what REIs can do for a CPA. The reason to share this information is so that you as an investor get the most bang for your buck. CPAs sell their knowledge to you in the form of time. Every hour (or half hour or quarter hour or six minutes) that a CPA works on your information doing “busy” work to get ready for a tax filing is that much time they can’t spend planning or analyzing without billing you for it.

• -Set up a meeting before year end to go through any changes you may have to your filing. This one is on your CPA. If they are not being proactive and taking time to help you plan throughout the year, you probably aren’t getting your money’s worth. A pre year end meeting can help determine what documents will be needed, when you will be ready to file, what changes to tax laws are applicable to you, what changes to your business occurred during the year and if there are any steps you should take prior to the end of the year. The best example of one of these steps is always the timing of a major purchase. Based on your taxable income and the changes in tax laws, there may be times to buy before year end or wait until after.
• -Have your records set up and ready to go. If you don’t want to pay a bookkeeper to take care of this task during the year (which is completely ok) make sure that when you walk into your CPA’s office you can provide them with the reports that are needed. These reports being a balance sheet, income statement, major purchase/acquisition documentation, etc. I like to tell my clients that I’m a cheap CPA, I’m a reasonably priced bookkeeper throughout the year, but during tax season I’m a really expensive paper sorter.
• - Be willing and ready to talk to your CPA about your future plans. This will allow your CPA to give you a road map on tax planning. If we are always looking back at what happened during the year or looking at the short term approach, a CPA won’t be able to help you plan for the future. The correct answer for the short term might not make sense for the long term.

This short list is just a start for most people and I hope if you have any helpful tips that you leave them in the comments below! Hopefully this can make your tax season a little easier and that you can use your CPA for real knowledge instead of strictly filing your taxes properly!