At what point should someone hire a CPA or Advisor?

Question

I know hiring a CPA or advisor is a good idea at any point, but at what point in an investor's progression does it become a necessity?

I imagine it depends on focus, like LTR vs STR vs development... Curious to know your thoughts and experience!

Also, at what point did you hire a professional, and what did you hire them to do?

Nathan Grabau · Answer

You want your taxes to be done professionally from the beginning and you want someone you can ask about the tax implications of your investing before making those investment decisions.

Beyond that, with regards to book keeping, I would wait until your time deems or budget allows for a book keeper.

Paul De Luca · Answer

I think it's worthwhile to do your taxes yourself once or twice so you know what's involved, but after that I think you should have a CPA do it. As the saying goes, "if you think hiring a professional is expensive wait until you hire an amateur".

Curt Riffel · Answer

I'm a tax professional, I recommend people do their own taxes if they are competent to do so and the time value of doing them yourself is worth it. It is a professional service. I would compare it to car repair, if you can watch a youtube video and feel confident changing out a part, then by all means save the money. If you don't have the time or expertise to file your own return, then you should offload it to a tax professional, preferably an EA or CPA with multiple years of experience.

Some clients have complex 1040s with multiple K-1s and rental houses. If you aren't keeping track of the carryforward losses you could be missing out on tax savings in the future.

Eliott Elias · Answer

Do it now, often times we hire people when we desperately need them. Don't come around mid tax season looking for a CPA, the good ones will be no where to be found.

Drew Sygit · Answer

think amount how much it will cost you if you get bad or no advice

Basit Siddiqi · Answer

I think if your tax return is simple(W-2 and a couple of interest/brokerage accounts), then software like turbo tax, H&R block will likely do just fine.However, when you get into investments(Real Estate, Syndications, etc), you may be better off hiring a professional.I think it is a good idea to match your tax profile with that of the professional.If you are a real estate professional, work with a CPA who understands real estate taxation.I also think people need to find the right fit with the CPA.I often find small real estate investors try to work with a large firm where their target market might be large institutional investors. Small real estate investors might find a better fit working with a small CPA firm.At the end of the day, The accounting fees need to in line with your investments.I often cringe when I hear/see accounting firms charge $2,500 and a person only has one rental generating $100 a month in cash-flow.best of luck.

Sanat Bhandari · Answer

@Ross Kline

I agree with all the replies above. Hire a CPA from the get-go and get a bookkeeper as soon as your finances permit.

For bookkeeping, I haven't used it yet but my CPA recommended an automated service called uplinq

Becca F. · Answer

Now all these responses are scaring me. I've been doing my own taxes through TurboTax Premier with my first rental in 2019. My 3 properties are LTR with one multi-unit owned with co-investors. I take the 12 month cash flow sheet the property management company gives me and plug in all the numbers (my percentage ownership) for the multi-unit. The properties aren't in LLCs. I did a renovation this year and will start entering the numbers.

A family member's CPA gave me a rough quote of $1500 - I'm in the San Francisco Bay Area. I have a TurboTax CPA look through my returns before I file. It is time consuming doing my own taxes but I feel like it's valuable knowing the financial details. If I had the properties in LLC's I would definitely hire a CPA.

Bryan Martin · Answer

As an accountant, I would say that hiring a CPA is a good idea at any point in an investor's progression. It's important to have a professional handle your finances, whether you're just starting out or have been investing for a long time.

In terms of focus, hiring a CPA is especially important if you're investing for long-term growth or developing a complex investment strategy. A CPA can help you make informed decisions and ensure that your finances are in order.

At what point should someone hire a CPA or Advisor?

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