What kind of accountant should i use?

Question

Hello. Im going to form an llc and build a rental property portfolio. I dont know alot about accountants and CPAs and bookkeepers or whether they are the same thing or different. But what kind of accountant should i look for and what exactly would they be doing for me? I know an accountant but i dont know if i could trust them with my business. Only because ive only seen them do basic w2 and 1099 and schedule c accounting. Ive never had an llc or rental properties so im not really sure what qualities to look for since i really dont know what they would be doing.. Bigger pocket experts all seem to reccomend i get a good lawyer and accountant. Any information is welcomed.

David M. · Answer

@George Rodriguez

First, you should continue to look at the new posts.  Daily BP gets questions about LLC's.  You do realize that its more expensive to do real estate investments with a legal entity like a LLC?  You will need to get commercial financing for one, which is much more expensive than residential, conforming loans.  You will need to operate your LLC's as a separate business otherwise you pierce your corporate veil and lose your asset protection (but have to keep paying for it especially since you probably didn't realize you had lost your protection).

Otherwise, I'd have to say finding a good accountant and laywer is still trial and error / referral.  Its like trying to find a good real estate agent.  I think you basically need a residential accountant if you are doing rentals.  By the way, what sort of rentals are you doing??  Similarly, you need an attorney that does real estate transactions...

Good luck.

Greg Schuricht · Answer

@George Rodriguez are you looking for someone to set up your books (bookkeeper) ?  Or are you looking more for advice (accountant/CPA)?  You can find accountants that do all of it, but many CPAs outsource their bookkeeping.  That said, there are many accountants in the real estate world that do everything.  You typically pay a CPA to complete your tax return once a year, but a bookkeeper will likely charge you a monthly fee to keep the books up to date.  The two services go hand in hand, so its hard to separate them.  If you schedule a call from a bookkeeper, ask them they do taxes as well, and what do they know about depreciation.  If they can speak with knowledge about those subjects they are likely a good candidate to help you.

Steve Morris · Answer

Get a CPA (not plain acct or bookkeeper) that has a resume and does/knows:

1) Investment property

2) Tax treatment of same

On 2) that changes all the time and book-keeper types just don't keep up.

David M. · Answer

@George Rodriguez

Yeah...  Its been discussed (and done by many people), but a lawyer has never chimed in.  I assume because they would want to get paid and its very dependent on each individual's circumstances and State law.

In my layman's opinion, it looks like the LLC is an alter-ego.  Especially if you develop a pattern of purchasing personally first, then capitalizing a LLC with the property.  You'd have to deal with your insurance, Title Policy, and having a lawyer setup something where your LLC is informally assuming your personal mortgage so that your LLC would pay for it.

Here are just a couple of posts:

https://www.biggerpockets.com/forums/51/topics/850407-how-to-pay-personal-mortgage-from-llc-account-with-co-minglinghttps://www.biggerpockets.com/forums/109/topics/848969-how-are-other-landlords-using-their-llc-shttps://www.biggerpockets.com/forums/12/topics/856842-first-rental-should-we-set-up-an-llchttps://www.biggerpockets.com/forums/61/topics/827155-starting-an-llc-after-two-propertieshttps://www.biggerpockets.com/forums/12/topics/857789-creating-llc-prior-to-purchase-of-first-propertyhttps://www.biggerpockets.com/forums/52/topics/848626-questions-about-putting-a-property-into-an-llchttps://www.biggerpockets.com/forums/12/topics/854526-do-you-setup-an-llc-for-each-property

I hear the jury is still out on series LLC's because they are so new.  Its not clear what sort of legal protection they provide.  Otherwise, it would make the backend cleaner and easier to use.

Or, you just maintain your properties and buy insurance for each property and an umbrella policy.

George Rodriguez · Answer

@David M.

Hey David. Thanks for the info. I am looking to rent single family homes and eventually move up to duplexes, triplexes, and quads. I was planning on getting all the financing in my name and when its all set and done change the title to the LLC but still the leave the financing under my name that way i dont have to mess with commercial financing. Do you think this will tear the veil? Because it could potential be looked at as mine due to comingling. I was thinking about doing a series LLC with a subseries for each property. Its basicly one large llc with mini llcs under it called subseries. Each subseries would be for each house it has the same protection as a llc.

What kind of accountant should i use?

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