Reasonable CPA fees?

18 Replies

Hi all,

Im currently holding a property under an LLC last November. I hired a CPA to do our taxes and bookkeeping.

Recently, he sent me an invoice for all his services. It was about $550 for the tax returns, which is quite average according to my research.

He also charges about $160 per month to prepare our monthly financial statements. (I send him the company bank statements and expenses every month)

But my main concerns are the Review Doc & Setup Partnership Chart of Account fees and the State & Federal Software fees.

The Review Doc & Setup Partnership Chart of Account fee is $1400!

The State & Federal software fee is $105. 

Are those fees normal in your experiences? 

Do you not have a PM? If you have a Pm they would put all your expenses and income in reports automatically usually.

My cpa charged me 575 for tax returns

Hey guys,

I don't have a property manager since its just 1 property. But Bob, it just shows up in the fee breakdown as "November financial statement" and "December financial statement". 
What do you guys recommend that I do? Sorry, Im quite new to this, so Im still learning. Thank you all for the replies so far!

@Sangenya Machi

Hard to reply, because we do not know what exactly is included in his services.

I recommend you ask him (or his staff) to explain each item and clarify which ones are required and which are optional.

Thank you for sharing this atrocity, Sangenya.  I was considering hiring a tax person until now.

So all that for 1 property? Guess they figure you are ripe for a cleaning because of the LLC. The 1065 and k-1s are cake as long as less than $1M so you don't need a sch L or M be completed.

I do taxes for 2 LLCs, an s-corp, a sale or 2 most years and 30+ rentals.  No way I can afford to not do it myxelf. Thanks for the warning! PS- you are being screwed.

@Sangenya Machi Setting up your rental business as a business is a good idea. But, there isn't a need to have a monthly P&L at this point unless the property is a hotel or multiple doors. I would look at a good umbrella policy and do away with the LLC until you really need it. You have complicated the situation and need to simplify it. I'd also look for another accountant.

I only have 7 properties and pay around $700 a year.  We talk several times a year and I've never been billed for those calls.

Good luck

I have seen some CPAs in your area, Manhattan, who charge huge fees just because the people who they are catering to are used to paying premium for everything! Like rent, food, etc. One CPA from Manhattan told me explicitly that he charges way more than he did when he had a practice in Florida, because that's what people expect for a CPA in Manhattan. 

I am personally appalled by that outlook! Unless there is something else that he is offering above his competition that you need, I would look elsewhere from here on out.  There are also a lot of great CPAs here on BP who work virtually.

It's tough to classify any fee as normal considering everyone's situation and portfolio is different. However, it sounds like your CPA is mainly providing preparation services (tax prep, financial statements, preparing your books).

With all these fees you're paying, does your CPA consult with you and help you tax plan? That is where the value really is - you keep your tax bill low through effective tax planning and strategizing.

It seems like, since you're inquiring about the normality of the fees, you don't feel the services justify the amount of fees you're paying. If your CPA provides you with tax planning/consulting services throughout the course of the year, the fees wind up paying for themselves. If not, it may be time to shop around and find someone who does.

Just my two cents!

Can't say on the tax returns, not sure what he has to file or if you are a day trader on the side.

Regarding the monthly financials - this is likely under an hour at CPA rates or maybe a couple hours at bookkeeping rates.  For one property it is more of a PITA to complete the job every month.  If you don't need monthly financials I would have them hold off and maybe tackle several months at a time.  Maybe quarterly or just pay for accounting services at the end of the year.  You could also look to hire a bookkeeper, not a CPA, to complete the basic accounting function.  Most of us don't like this work anyhow.  Our company has a bookkeeping department but some don't so you pay CPA rates for the work.

It is hard to tell what the $1400 charge is for, if you have a lot of legal documents related to your LLC and operating agreement this could take some time but in most instances I don't bill this time unless I am helping create or modify it. If he made amendments to your agreement this is likely a lot cheaper than legal fees. If he simply reviewed them and setup your accounting file this seems high. It is likely a "one time" fee. I would just ask for a better explanation.

As far as the software fees go, some companies bill them separately, others don't.  Our tax software is very expensive and we have to pay on a per return basis on top of it.  Your H&R blocks and some others charge there "e-file" or "transfer" fees so this may be commonplace in your area.  

Originally posted by @Yonah Weiss :

I have seen some CPAs in your area, Manhattan, who charge huge fees just because the people who they are catering to are used to paying premium for everything! Like rent, food, etc. One CPA from Manhattan told me explicitly that he charges way more than he did when he had a practice in Florida, because that's what people expect for a CPA in Manhattan. 

I am personally appalled by that outlook! Unless there is something else that he is offering above his competition that you need, I would look elsewhere from here on out.  There are also a lot of great CPAs here on BP who work virtually.

If you talked to one guy and he said his rate is higher in Manhattan that is likely because he moved his practice to Manhattan the cost of living is a lot higher.  Higher rent costs, higher costs taking clients out to meals, etc.  That doesn't necessarily mean he is making more money, he likely had to charge more to keep up with expenses as well.

I network with a couple people in NY, their charge rates are a lot higher and they aren't any better CPAs.  I talked to one and with my experience I would make roughly $50-$75k more per year in NY doing the same thing I am now.  Would be nice to have the money but it would be a lot harder to find a house to live in for $200k though!  

@Bob B.

Hold on to your CPA if he is experienced and doing a good job! If you pay $700/yr with 7 properties, and that includes several free consultations - he is working for free. Either he is giving you an insane discount or going broke if this is his regular pay scale. Or maybe he is incredibly efficient where it takes him 20 minutes to complete your tax return.

Either way, you won't easily find this steal of a deal.

Thank you all for your replies, I've learned a lot! I have no idea how to mention each user since Im new to this forum. 


I heard from a relative that investors usually put 1 LLC in each property, so I followed through with it. I considered getting umbrella policy but I was told since I put it in an LLC, its not so necessary. But wow $700 a year is quite a bargain!

The CPA only reviewed the LLC documents and closing documents (mortgage, title) to calculate costs, he didnt modify any documents. So I'm assuming its a one time fee. And he lives in Florida, so hes working virtually with me through phone calls and email. So I have no idea why the fee is coming up so high. I only went with him since he's a family friend.

Anyhow, I think Im going to ask him why there's that $1400 fee, and why I need to have monthly financial statements for $160 per month. From the looks of it, it seems it's better for me to look for another CPA if he is going to try to charge so much. Thank you all!

An llc per property is overkill. Get some good insurance

@Sangenya Machi yes you have liability coverage in most insurance you have.  If you want to you can buy umbrella insurance on top of that.  So it’d be for example 500k liability on your first policy and 2M on your umbrella 

Originally posted by @Sangenya Machi :

I heard from a relative that investors usually...

I only went with him since he's a family friend.

The sooner you stop relying on "heard from a relative", "family friend" etc. - the better. You're in business.

@Sangenya Machi , That $1400 fee is out of line in my experience, but I don't know what is normal for your area.  If I had a $1,400 fee for just looking over my documents I would have a fit.  He is not an attorney and cannot give legal advice, period, only tax advice.  I am an attorney and would not charge that much to review a document.  Some attorneys would, and they would be shysters for doing it.  If you only have 1 property you dont need monthly statement lol you monthly check balance will tell you what you need to know, just have it done yearly.  It takes a hell of a good property to stand the kind of overhead you have.  With it being only 1 property you could do it yourself.  I have about 30 units and do my own books, but i do pay for tax preparation.  I have 3 companies, and some personal properties, a part time law office, and still spend under $2K per year.  Your profit should dictate how much accounting you need, not your accountant.  If your profit doesn't justify it you cannot afford it.

@Jerry W.   I see, thank you for your professional advice. My property has 5 units, and the amount of income is basically the same every month, so personally I think it doesnt warrant $160 a month. But I think based on everyone's answers, Im getting a feel that the accounting shouldnt cost more than $800 a year. But Im definitely still going to pay for tax preparation. Thank you for the info.

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