@Mike Hottinga, you don't have to setup an LLC since you're just running this business as a Sole Proprietorship (sounds like you own the property in your name). Although you could technically form a property management LLC and create an agreement between yourself and the LLC. Arizona LLC's are cheap to setup ($50 state fee) and they don't have Annual Reports (like most other states). But again, not totally necessary, but it could help with learning and experiencing. In that case, you'd form the LLC first, wait for AZ's approval time, then once the LLC is approved, get your Federal Tax ID Number (EIN) and open an LLC bank account. You could connect paypal to the business checking account and handle everything like that.
Regarding taxes, check out my "knights of the roundtable" strategy.
Here's the rundown:
• Write down your top 4-5 questions about RE and taxes, and and put them in a Word (or similar) document.
• Copy and paste those questions 10 times, and create a divider line between each section of questions.
• Google search “business accountant + {city, state}” and browse websites very quickly (1-2 minutes) and then enter the contact information of 10 accountants in your document. The reason I say fast here is because you want to be using your gut/intuition on your initial decisions.
• Now, spend 1-3 hours and call every single one of the accountants. Say, “Hi my name is {Your Name}. I’m starting a new business and I have a few tax questions about taxes. Are you able to help?”
Here’s the catch: because you’re implying that you’re a potential new client, each accountant will gladly spent 5-15 minutes with you on the phone for free. If they don’t, delete them from your list and find a replacement.
Write down their answers to your questions in your documents, and enter any other notes about the call. Ex: John was really well-spoken, Susie constantly interrupted me, Steve clearly had no idea WTF he’s talking about, etc.
By calling 10 accountants, you’re “pairing them up” against each other, cross-referencing their information and getting smarter (and more confident) with each call.
At the end of all your calls, you’ll be mentally tired, yes, but you just learned a ton! You’ll immediately be able to eliminate 2-4 people. Either because they were flat out wrong, you didn’t like their personality, or your intuition just didn’t feel good about them. Always trust your intuition. Then, there will be about 2-3 people who really stand out; people who you just feel good about. You like them personally, as well as professionally.
Follow up with them and ask them to a 5-min “coffee and a quick hello”. Tell them you want to put a face to a name and shake their hand. The reason for this extra step (which a lot of people don’t think is necessary), is even the craziest and weirdest people can sound good on the phone.
The in-person coffee meeting shows: 1.) if they are willing to invest in you, and; 2.) allows you to really get a good gut-check on them and make sure you feel good about proceeding. Do this, and you’ll find a great accountant who will help you with your business for years and years. Wouldn’t you rather have an awesome accountant for the next 10 years instead of finding a new one every 1-2? I feel this strategy is the best route there is.
