so this company contacted me and offer me unlimited access to a account to ask as many tax questions I want and they offering assistance with bookkeeping and doing my taxes with a app that I can monitor everything for my business, the price is 90$ a month for they service, do you think this is a deal ? Or it’s over priced and I can find cheaper ? And also I will have unlimited access to a business tax consultant, what are the best ways to keep your business and real estate properties in order? Or do I need services like this to avoid tax trouble, you think the 90$ a month is worth it ? Or if you have any recommendations to places that do the similar thing that’s cheaper please private message me about them so I can do my due diligence thank you I appreciate it and I love talking to you guys I learn something new from all of you everyday
@Montez Blackburn if you make good use of the service and they do all that then it is a deal. My CPA does all that but he charges me quite a bit more. It is his job to keep me out of trouble. I have been audited a few times and he always handles the whole affair.
@Bjorn Ahlblad how much do he charge you for all that ?
@Montez Blackburn He has been my CPA for 30 years before that it was his father...........the amount I get charged depends on how much he and his team does. They also handled my company stuff when I had another business. Generally now it varies from 3500-1500. But when I was more active it was considerably more.
@Bjorn Ahlblad okay ! Thank you ! So do you think I should pay the 90$ a month ? That's total 1080$ a year but that's for every LLC I have and I plan on buying a lot of properties so that 90$ will add up lol ! but I guess I can use it as tax write offs so if you was in my business I'am 24 and I just started my business and plan on buying a 4 plex to house hack next summer would you recommend me paying the 90$ a month for them to manage my taxes for each one for me ?
That is pretty cheap. Most will not even do just the bookkeeping for that cheap. It is definitely a good price, but you also get what you pay for. It could be worth trying, but you may want another accountant to take a quick look after a few months to verify everything is being done correctly.
@Caleb Genry . I think if you can use them as a learning tool, then this is a BARGAIN! If, however, you want someone to just 'handle it' and make sure everything is perfect AND do your taxes...i don't think you're paying enough!
I guess another question is... What sort of rei are you doing? Flips? Buy and hold? How active are you? Sometimes it makes more sense to have someone just clean up your books at the end of the year and be done.
@Montez Blackburn I’ve been using the same accountant for 20 years to do my taxes with several businesses, trusts and properties involved. I’ve always done the bookkeeping. This usually runs me about $750 total.
This year as I’ve added a few more properties I’m thinking of hiring a bookkeeper who specializes in Quickbooks which is the software I use, I don’t know enough about it to fully utilize it, to organize my accounts and at the end of the year run reports for me for the accountant.
I haven’t gotten an estimate for this service yet but think that as I’m expanding my portfolio this is a wise next step to help minimize the damage from a possible audit. I don’t believe it will take someone familiar with Quickbooks more than 5 hours to reorganize my files.
I would suggest getting your accounting in order while you are starting out to have a good foundation to build from as you expand.
@Caleb Genry okay thank you I appreciate you a lot ! And also wouldn’t a property manager have all my receipts on repairs and stuff like that ?
@Joseph Schommer thank you I appreciate your advice ! And I was just going to do “buy and hold” real estate
@Alecia Loveless yeah I think i’am just gone use they services to profit a audit 😭 that way I’am able to learn from them, plus with the 90$ wouldn’t I be able to write that off on my taxes ?
@Montez Blackburn , most wouldn’t get out of bed for $90/month. That’s less than a nice dinner. Give it a try and if you don’t think it’s worth it, at least it was $90 and not $900.
@Montez Blackburn yes, it is a write off for you. You can do (1 - your tax rate) x 90 = your real monthly cost for their services.
The first thing you probably need to do is to get rid of all our LLC's. It is senseless to have multiple LLC's because they don't stop a Plaintiff from suing you and getting a judgement for your personal interest in each LLC. Yes, they cannot sue each LLC, but they can get your personal assets from each one. LLC's are a waste of time and money. Get rid of them, have one set of books for all your single family homes and for large apartment buildings you should only need a DBA and it is better to have a separate one for large apartment buildings.
There is a huge difference between a book keeper, accountant and CPA. You should be the bookkeeper. The bookkeeper is the person who creates the books and that consists of putting together (compiling) all your records. The bookkeeping is super simple. I created my own software, but you can use Quickbooks (I hate with a passion) or create your own Excel spreadsheet.
You (the bookkeeper) takes your checking account every month and you create only two columns (DEBITS and CREDITS). That is all you need.
It goes like this:
6/20/2021 Deposit Rental Income 10,500
6/21/2021 Deposit Washing Machine 100.25
6/22/2021 Acme Painting Repairs 800
That is all you need with the exception you can have a column for check numbers and put a total on the bottom.
When you are finished your debits and credits should be exactly the same as your bank statement and that is how you keep your books accurate-to-the-penny.
Personally, I would never do business with an accountant because accountants don't have the stringent training a CPA has. When an accountant does your books he generally does not do your books in a fashion where he proves whether or not you are providing him with accurate and legal information. When a CPA does your books he is watching to make sure you are giving him the correct (legal) information and he will tell you when something is not right and he will tell you when you may get into a jam with the IRS. At least, my CPA does and he called me out several times and told me something was not going to fly with the IRS like when I purchased 3 appliances that cost me $21,000. My CPA certifies that my records are correct.
So that you are successful, you need to be a good bookkeeper and give your CPA records in an Excel format so your CPA can easily upload your records to his files. My company uses credit cards for almost everything we do because when using a credit card we get statements that back and prove what every purchase is for vs. using checks where they get lost and when my employees lose receipts all we have is bank statements with numbers and no receipts. At the end of the year we have about 18,000 credit card transactions. Imagine how much time it will take your CPA to enter each transaction into his database. So, we created our own database where we send our CPA the 18,000 records in an Excel Spreadsheet.
My CPA charges me $250 per hour, but 99% of the work is done by my CPA's secretary for a price I never checked on. Maybe, she gets $125 per hour and then my CPA only checks his secretary's work and then compiles the information somehow to create my documents for the IRS and other agencies. For each entity I own, I think I pay an average of $850 to $1800 every year with the exception that audits are billed at $250 per hour when meeting with auditors ad his office. I would rather be protected by a CPA any day.
In fact, when I first started my business in 1973, I hire an accountant. Two years later, I got his with fines and penalties for $30,000 due to my accountant's failure to report sales tax correctly. I was devastated, but I had just completed a $36,000 plumbing job that cost me only $7,000 to do and I used the $29,000 profit to pay the sales tax and penalties. Then, I switched to a CPA and never had one problem in 48 years.
@Jack Orthman wow ! I learned a lot from this post and I appreciate you so much ! I like how you got in detail about Business can you private message me so I can connect with you ? your very knowledgeable and I’am 24 and I’m in search for both real estate and business mentors if you have the free time to network
@Montez Blackburn - I'd be afraid of taking advice from someone willing to work for $90/month
@Montez Blackburn I would start by asking yourself how complex is your REI? Do you have a full business with LLCs and assets that need accounting? I have a business, multiple llcs/assets, two employees and my bookkeeping + tax services runs for $550 a month. This is with a friend (who owns a tax firm) who goes above and beyond to make sure my business runs smooth so $90 a month is really cheap. Before, I had purchased an online service ($75 monthly) to take care of my taxes and bookkeeping and it was terrible. We had to re-do years of taxes filed incorrectly.
@Montez Blackburn Delegating is always a good idea but 1st let's backup why do you think you need an accountant? Do you have 200 doors?
I've got 35 doors and have no need for an account nor a CPA.
Study what you actually need to track for landlording specifically for your April 15th tax time schedules schedule is it's not that much info.
I take pictures of invoices and checks I write contractors and email them to myself via Gmail and then in Gmail I move them to folders or labels 1 to 3 Main Street.
Then come February I just go to each folder or label and add things up use the subject line is the address space dollar amount space what and then the picture where explanation is in the body of the email. And I use home depot pro extra and they email the receipt to me so I don't have to take pictures of receipts either.
If you truly study what you need to have accomplished in bookkeeping for rentals it's actually extremely simple you do not need an account you don't even need ACP a to do simple schedules with turbotax...
I fear most folks think things are more complicated than they really are.
@Michael Ablan 😭😭 omg really ? Do it really sound that good to be true ? 😂
@Sofia Sharkey OMG!! really ! you just scared me 😂😂💀😭 so what should I do then ? Should I just keep track of all my own expenses and just hire a CPA to pay my taxes every year ?
@Curt Smith thank you I appreciate you a lot !! And I was just saying me being busy with building my business outside of real estate plus my real estate portfolio I don’t want to end up overwhelming myself with to much work and I end up messing things up to get Audit, so you do your own and bookkeeping and taxes ? This my first stating a business and getting into real estate lol I don’t want to mess things up and get in trouble with the IRS
Most folks are not as interested in tax code as I am. :)
All of BPs books are great, buy and read;
This book on RE taxes is a must read. Even (especially if) you outsource tax prep you need to know the code yourself.
How to hire a tax prep person. Need not be a CPA.
- ask; do you own your own rentals? If no = move on to the next.
- only hire folks to do something that they themselves do. you only hire plumbers who know how to replace tubs and valves, Medical Drs who are specialists, please only hire tax prep folks who are experts in RE taxes and to be an expert IMHO they need to own their own rentals. I hear of too much bad advice from folks (including CPA) that is not that good.
Accounting; just need to track expenses, repairs, inhancements, rent collected. The tax prep expert will help you with was the expense really a depreciated improvement, or a real expense etc. Read about RE taxes its not that difficult. The real decissions are in the year of "in service" determining the cost basis,,, where the years after just normal operations the accounting is much simplier, 99% of expenses are deductable as expenses against rent income.
Knowing the tax code you can ask your contractor to divide up a small fix up into $2500 per each invoice to allow for De-minimus expensing of the whole turn over rehab. Where a $4300 invoice would need to be capitalized (depreciated a portion each year). This is where reading for yourself the tax code you can guide contractors and expenses to be favorable. Once you have the $4300 invoice its too late.
You need to be aware, even an expert, in RE taxes to know how to chop up a rehab and get the documentation that is favorable (and legal).
Best to you.
In the past, I tried to help investors one-on-one and it requires a totally different commitment that I can't handle. I don't feel comfortable giving personal advice. Sometimes, people ask for advice and I won't have the time to answer them. Sometimes, I don't have the time to write on BP for a few weeks or months. I don't know how BP works. I don't know what a Colleague Request is and I don't have the time to get involved with other things. The reason I have been writing relentlessly on BP is because I've had a sciatic pain for the past 6 weeks where I cannot sleep one minute during the night. I can't walk and when I sit at my computer and write on BP most of my pain goes away. Then, I try to get a few hours of sleep in the daytime.
If anyone is really serious about wanting to learn how to do their books with the simplest and most-accurate software then get a copy of MS Access 2003 on ebay or somewhere and download the the complete version. After you download MS 2003 I will give you a poop-load of software I developed, for free and I will teach you how to use the software.
I am not interested in wasting my time with people who are not serious about running a serious business. I've tried to work with business owners in the past, spent a lot of time with them and most of them have me b.s. like they didn't have the time to make changes, were retiring, or whatever and I questioned why they bothered to waste my time.
Many people I worked with wasted a lot of my time because they were already using Quickbooks. I hate Qickbooks with a passion because it is too complicated to navigate, too cumbersome to use and I challenged many quickbook users for accuracy and I always find many major accounting errors. When using my software it is very simple to use and records are accurate-to-the-penny. But, anyone who wants to change has to make a small effort to see the benefits and a small effort to make the change and that makes it difficult to work with people. My software applications do so many things it tales a week just to explain what they do and the reasons why.
I don't know for sure because giving the software for free is a huge commitment that takes a lot of time. Maybe, if it is okay with BP I can have one thread for each piece of software and we can work with everyone who is interested at the same time, but before I do anything I want the people who are interested to have the MS 2003 Suite already downloaded. Then, I will work with people so they can actually get familiar with each application. That could actually be fun and productive.
When you say they offer assistance with book keeping, does that mean you give them a box of receipts or they give you access to an app and tell you a new roof is CAPEX, not maintenance and expect you to enter the data? That is a big difference. If you decide to leave their services do you loose your data since it is on their app?
For someone just starting out, with nothing, its way overpriced IMO. Read a book and learn the basics of taxes and accounting.
I enter my own records into the Stessa website and take it to my tax guy. It takes maybe 2 hours a month to do the data entry.
My tax guy charges me between $350 and $450 to do my taxes. My taxes are sort of complex. 4 rental houses, a 4 unit apartment, and a storage building being rented. 3 houses, one apartment being rehabbed to be rented, but not in operation yet, just tracking costs now. IRA, inherited IRA, ROTH IRA, general investment portfolio, 2 kids starting college this year, one 1 year old. Retirement pension.
He is also available to run numbers for me. For example, I recently wanted to buy a new house, for cash with some combination of my investment portfolio, IRAs, money in the bank, etc. So, knowing my IRAs will need to have taxes paid on what I withdrew, I asked how much I could withdraw, using the new child and dependent tax credit, and the rest of my usual deductions (expenses and depreciation) assuming one more property was put into service this year and not have tp pay taxes. I hate to leave deductions and tax credits on the table, and my personal IRA is very healthy so I prefer to use it over say cash on hand. We discussed possible major expenses with each property, likely income, etc. He ran several scenarios, explained them, and I had an absolutely safe number to withdraw and have no expected taxes to only if you buy 2 new HVACS will you pay not taxes amount. All that work was free! He is available to chat whenever I ask to make an appointment. Now if I showed up every week, I am sure I would be billed something! But 1 or 2 times a year, no problem.
$90 a month when just starting is way over the top!
Whether $90 a month is worth it or not really depends on several factors
1) How big is your portfolio - If your portfolio is 1 unit, this cost sounds expensive
If your portfolio is 10 units, this service is cheap.
2) The level of experience of the company.
3) What does it really mean that they will monitor your taxes through an app.
It doesn't sound like they are doing your return, reviewing it and signing it.