How much do you spend on tax advisors and tax prep?

Question

From DIY $0 to a full-time staff hire, how much do you spend on tax advisors and tax prep and why?

It’s our first year in business and lost at what I should spend and what I’m going to get in return.

Marshall Leipprandt · Answer

@Ken Nakamura I pay a CPA about $1,500 to prepare and file my taxes. My CPA will also take calls/emails throughout the year when I have specific questions. He specializes in real estate and I bounce ideas off of him regarding future real estate strategies that I am looking to pursue and he will give insights on the tax implications that I need to keep an eye out for. Unless I am taking up a significant amount of his time, he doesn't bill me throughout the year for his time, although it would still be worth paying him in my opinion if he did bill me.

If you are trying to scale your real estate business (or any business for that matter), what you are getting in return is the time, knowledge, and experience of a trained professional who has spent years in school and has received multiple certifications to do their job. This is what they do everyday and they know what they're doing. It isn't worth your time to try and figure out the tax code and file your own taxes when you can hire a professional to ensure that it is all being done correctly.

In my opinion, if you are serious about scaling a business, you want to hire professionals to assist in the areas that you do not have expertise in. For example, if you wanted to flip 10 homes in a year, sure you could try to teach yourself via YouTube how to tile, run electrical, lay flooring, etc., but a contractor is going to be much more efficient at these things so you can therefore focus your time on revenue generating activities like finding deals, negotiation purchase contracts, etc.

Lastly, if you do hire a CPA, just be active with it. Ask them questions so you can get a basic understanding. You don't need to be a pro, but should be proficient enough to understand tax implications when considering making real estate decisions.

Michael Plaks · Answer

@Ken Nakamura

The prices quoted by two investors on this thread are bargains. If they get quality service for these prices, and their CPAs are able to sustain these low prices - great.

Read this older post that addresses many of your questions: https://www.biggerpockets.com/...

Alicia Marks · Answer

I pay about $800/yr, but I keep my books monthly. They file for 2 states and handle both personal and business taxes. I can ask questions throughout the year, but would need to pay a small fee for a full blown strategy meeting. Keep in mind that the cost of a CPA is deductible, so pay for what you need to get the job done right.

Scott E. · Answer

I pay about $2500 per year. Thats for personal and business returns. On average 5-7 income sources.

Chris McCormack · Answer

For a solid real estate or entrepreneurial CPA you may pay more than what others will but it will pay itself back in savings, peace of mind and compliance. The last thing you want for tax advice is wal-mart prices and wal-mart quality.

How much do you spend on tax advisors and tax prep?

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