CPA Advice, Flipping in Maryland
Hello BiggerPockets!
I am seeking some advice relevant to when to bring a CPA onto my team. I have provided an outline of my current situation along with the direction my partner (@kanwar sodhi) and I intend to go below.
We are currently working on a deal where, we will be using a hard money lender to purchase a property in the Baltimore City/County area to flip. Ideal numbers for us are, a purchase price around 100k, renovation around 50k, and an ARV 200k+, just so you know the amount of capital we are talking about here. We are also in the process of forming an LLC and hope to purchase a property in the next month or sooner.
While I don't understand the exact tax implications I know they will not be overly complicated, as we will likely only complete one flip this year. That being said, the tax implications will certainly be greater than what we have dealt with in the past. Figuring out how to file our taxes at the end of the year isn't our real concern though. I am confident we can figure that our ourselves, or hire a CPA during tax season. My concern is that my partner and I aren't taking the appropriate actions now to make sure we lessen our tax burden during filing time. I would also like to accurately forecast what our tax responsibilities will be, to a reasonable degree of accuracy. From the little I understand about taxes, it appears the biggest impact to our tax responsibilities will stem from how we set up our LLC. The common example I see is, people set up their LLC so that it is taxed as an S-corp, which I don't fully understand, but it seems to be beneficial?
To conclude, given the our small portfolio is it necessary/beneficial to talk to a CPA at this point? Ultimately we intend to increase the number of flips we do a year to 2-4, and start to acquire buy and hold properties. At some point a CPA will be needed, the question is when?
It seems the tax gurus of BiggerPockets are @Brandon Hall and @Linda Weygant so I hope you don't mind me tagging you here.
I look forward to hearing from everyone! (...or anyone)