When to get a CPA and how to vet them

Question

Hey all!

Curious as to when you feel it is necessary to hire a CPA and then what is it like working with them? Is it just around tax season, all year round, etc. I'm 19 now and while I don't have any major businesses or anything like that (yet), I'm still looking wanting to get all the people in place. And then follow up questions - how do I vet a CPA and do they need to be local to my area?

Thank you!!

Account Closed · Answer

Abby, I'd say at this point a CPA or financial advisor could be useful if you have business plans you want to run through the numbers with, but not something you necessarily need. I'd see it as an investment in yourself if you choose to meet with one. Once you start making a decent income ($50k or over in my opinion), it may be a good idea to meet with a CPA or tax advisor to discuss tax strategies. In terms of finding the best for real estate, look no further than bigger pockets. Won't get much better than the folks in this forum.

Sam Hudacek · Answer

Hi Abby!

You asking these questions at 19 is awesome! I wish I had the same mindset when I was your age, so keep it going!

As far as finding a CPA, I can definitely say that it is never too early to get a quality CPA on your team. Once I got into real estate, what excited me the most was the amount of money I can save or better yet keep due to tax strategies.

If you plan on purchasing your first property in the near future, definitely start looking for a CPA now so that you can learn tax strategies early on and can ask them questions prior to closing on a property.

When it comes to vetting a CPA, I would say the most important part would be their experience. Ask questions about their experiences with investment property tax strategies such as depreciation, cost segregation, 1031 exchanges, write-offs and such. The difference between a good and a bad CPA is that the good one will give you options on how to save money on a certain issue tax wise in opposed to just saying it cant be done. Afterall, most of the tax code is written to save you money.

The interaction with CPAs will vary, but if you and your CPA are on the same page you will benefit greatly. For example, I can text or call my CPA at any time and he will always get back to me and answer questions, most of the time free of charge. Just remember if you CPA constantly tells you that this or that cant be done, its probably time to look for another one.

If you have any more questions feel free to reach out, hope this helps!

Michael Plaks · Answer

Are you also looking for a divorce lawyer now? Just in case, you know, if you might one day want to get married and then later divorced? :)

If you do not have active businesses now, there's no need for a CPA yet. Eventually you might need an accountant, for one or two reasons. One is to prepare your taxes if they get complicated enough where you need help. This would be a temporary project-based engagement. The other reason is to offer you tax planning ideas if your business size and complexity warrants it. This is typically an ongoing engagement, although different CPAs have different arrangements.

As to vetting a CPA, search this forum. It has dozens of threads discussing this question. For example: https://www.biggerpockets.com/...