CPA or Bookkeeper?

[Fay Chen]

So I'm starting out with one SFR and looking for someone to help me with taxes. I found a few bookkeepers who also prepare taxes. One of them is a real estate investor himself! Can anyone help explain to me the practical difference between a bookkeeper and CPA? If I can hire a bookkeeper to do my taxes, what benefits do I gain by going to a CPA instead? What do you use and why?

[Brandon Hall]

@Fay Chen

A bookkeeper is a professional that will keep your books, meaning they will log income/expenses into your software of choice and produce requested reports to show your business's position. 

A CPA can do the same thing but may act as more of an advisor, keeping watch over your business and making suggestions based on what they see. 

At this stage, you don't need a bookkeepr or a CPA to do your monthly accounting as one SFH will not generate enough income to justify the expense. However, a CPA can certainly help you with tax preparation and planning which is what you should be looking for at this stage.

For tax prep/planning, the obvious benefit of using a non-CPA is the potential cost savings. A CPA will be more expensive, but has been tested by a rigorous exam and is required to keep the license active by obtaining a large amount of continuing professional education (CPE) credits. A CPA will likely know higher level tax planning and more in-depth strategies (not that a bookkeeper doesn't know this also!). 

Regardless, you need someone who knows real estate, not a general practitioner. You also need someone who is going to be your trusted advisor, someone who is on your team from day one and wants to see you succeed.