The Investor’s Guide to Building a Long-Lasting Relationship With a Top-Notch CPA

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Now that tax season is in full swing, you are probably wondering whether or not you should hire a CPA.

If you read my last article, you’ll know my answer is that you should, at the very least, speak with a CPA. A short consultation can reveal so much about how you are running your business or real estate portfolio.

As I’ve met and collaborated with hundreds of BiggerPockets members, real estate investors, and business owners over the last year, it’s painfully obvious to me that CPAs are horrible at communicating their value proposition during the sales cycle.

But hey, what can you expect? We like numbers and hate making sales. That’s why we chose to specialize in a back-office role!

All kidding aside, because we are inherently bad at communicating our value proposition to potential customers, we may leave you scratching your head and wondering why in the world someone would pay hundreds or thousands of dollars to hire us.

And that’s certainly not a bad question to ask. If you don’t know what you’re getting, like any product or service, you probably shouldn’t buy it.

So we’re going to discuss what a CPA relationship looks like, the key services they should offer, and what you should expect as far as pricing.

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Are You a Transaction or a Friend?

Ok, I admit “friend” may be over the top. But there is a huge difference between methodically churning out tax returns versus grabbing drinks with your clients and building long-lasting relationships.

I doubt anyone wants to feel like they are viewed only as a transaction, yet I find many people feel their CPAs view them this way. Spoiler alert: Some CPAs do view you as an annual transaction.

You can pick these CPAs out of the crowd before you even sign on. They are the ones who will provide you a quote without first trying to get you on the phone to learn about your situation. Their responses will be short, and they will fail to offer meaningful insight or advice. A quick Google search doesn’t reveal articles they’ve written or content they’ve created. They are the “churn and burn” type.

Granted, all CPAs will get like this to some degree during tax season, so don’t judge us too hard.

But the point is that real estate investors and business owners should be in the market to build long-lasting relationships with their CPAs.

You don’t want to be considered a one-and-done transaction. You also don’t want to form a relationship with a CPA who doesn’t have your best interest at heart.

Look for clues that a CPA wants to build a long-term relationship with you. Those CPAs will be worth their weight in gold. They truly care about your growth because as you grow, they grow. As they provide you with great service, you refer. Those are the CPAs you want to work with.

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Clues that Your CPA Wants to Build a Relationship

The first clue is the most obvious. If during the initial consultation the CPA literally says, “I aim to build long-term relationships,” then there’s a good chance they mean it. True, saying and doing are completely different things, but speaking from a position of personal experience, I hate going back on my word.

The second best clue is how you feel about the connection you built during the initial consultation. Pay close attention to what the CPA asks you and how they ask. There’s this thing called emotional intelligence that many CPAs tend to lack. While the CPA’s time is valuable, there should be some attempt at finding common ground to build a relationship.

Do they ask about hobbies? Your alma mater? Sports allegiances?

Do they ask about your investment strategy? Are you able to talk about real estate without the tax aspect for a few minutes? Is the CPA providing any sort of valuable insight in regards to real estate strategies in general?

Most significantly: Does the CPA ask you about your future goals? Frankly, if they aren’t asking you about your future goals, how can they provide high quality advice? The advice may be sound, but if it doesn’t align to your goals, it likely stinks!

Your CPA Should Provide Planning Services

If you are using a CPA to prepare your tax return and you don’t hear from them until tax season, it’s time to switch service providers.

Tax planning is what it’s all about. It’s the bread and butter — where the real money is saved.

It’s important to understand that tax preparation is NOT synonymous with tax planning. These are very different services, and you should not expect to receive the benefits of both unless you are happily paying for both.

Contrary to popular belief, tax preparation doesn’t save you money unless something obvious pops up. Tax preparation is a compliance based service. Don’t get me wrong; it’s an extremely valuable service, but don’t hire a CPA solely to prepare your tax returns and expect to save a boat load of money. You’ll be disappointed.

Related: The Investor’s Complete Guide to Finding & Hiring a Perfect CPA Match

Think of it like this: tax preparation is reactive, while tax planning is proactive.

The CPA you build a relationship with should offer some form of tax planning services. It could be as simple as spending an hour on the phone talking high-level strategy. Or it may be a binder with a report that includes all sorts of cool strategies you can utilize. Regardless, you need to find out if tax planning is offered.

Most CPAs will offer tax planning. The good CPAs will cross-sell tax planning while they are preparing your return. For instance, while I’m preparing a 2015 return, I may say, “Hey, there are a few things we can do to make 2016 a more tax efficient year. Let’s talk about it.” Expect to pay for that advice, but also know that the net present value (NPV) savings you’ll realize from following that advice will likely greatly exceed the cost of the service provided.

As your real estate portfolio expands and your business continues to grow, it becomes more and more imperative to engage a CPA in the higher end tax planning. Quarterly phone calls just won’t cut it.

You’re going to want your CPA to dig through all of your financial information and hash out multi-year strategies that run parallel to your goals and your expected growth. The NPV savings you realize from the creative solutions suggested and implemented can be tremendous.

So what does tax planning cost? Glad you asked.

You can expect to pay a few hundred for the lower end, simple phone call. For the higher end services that I described in the paragraph directly preceding this one, expect to pay a few thousand. BUT know that the value you receive will greatly outweigh the cost.

And you can likely have the service billed to your business, so now it becomes a deductible expense.

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That Said, Let’s Talk About Price Shopping

To a certain degree, everyone is guilty of price shopping. For instance, I don’t know what makes Harris Teeter’s bananas so special that they charge 10 cents per pound more than Safeway!

I’m all about price shopping, except when it comes to running a business. With my business, I want quality. And if I have to pay a pretty penny for the best quality, I’m happy to do so.

Why? Because I will fully understand the value-add of whatever it is I’m buying.

Whether you agree or disagree, here’s what you can count on when you price shop:

  1. You miss out on hearing the entire value proposition.
  2. You may pass up superior service.
  3. You only hurt yourself.
  4. We know you are price shopping and may even decline taking you on as a client.

1. You miss out on hearing the full value proposition.

Remember about 1,000 words ago when I said CPAs really stink at communicating the value they bring to the table? Well, price shoppers tend to not stick around long enough to hear us out. When one of the first questions asked is “What’s your price?” we are left scrambling trying to tell you all the benefits we can offer.

Will the CPA charge you per minute, or do you get a certain amount of minutes for free until billing kicks in? How available is the CPA? Can you talk real estate with this CPA, or are the only allowed conversations tax related? Will he/she review your prior years’ returns for free?

All of that affects the value of the service you are going to receive. If you balk at the price and don’t stick around long enough to hear about those benefits, you may be passing up superior service!

2. You may pass up superior service.

There’s a reason CPAs don’t charge H&R Block rates. H&R Block once hired a friend of mine while we were in college. His major? Geology.

If you want a non-tax person to prepare your tax returns, go for it! You’ll save a couple hundred bucks on tax prep fees — but when the IRS rolls around and you have to fix things, it may be painful.

Even at the CPA level, we’re not are not all the same. Some offer higher levels of value than others, and that should be reflected in their pricing. Superior service, for instance, may be as simple as answering your questions within 24 hours, which can add a lot of value to the client. If you pass up superior service, you’re only hurting yourself.

3. You’re only hurting yourself.

There’s this thing taxpayers do called certifying that their tax forms are correct. You can see the certification you make by signing, under the penalties of perjury, this form.

This means that at the end of the day, it’s YOU who is responsible for what shows up on that tax form. And believe it or not, price shopping will surely increase the errors that appear on that return.

You may end up with someone who has little knowledge of real estate. Real estate tax is a very niche area and I find errors all the time, even from top tax partners in larger firms!

You may also end up with someone who rushes to get returns done due to the lower bill rate. The result? Low quality returns and an audit, courtesy of the IRS.

Related: 3 Tell-Tale Signs You’re NOT Running a Tax-Efficient Business

Errors will be abundant when you opt for the cheap option. That’s a common facet of life as well. Cheap is generally synonymous with lower quality. A low quality return is not something you want to find yourself signing off on.

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4. We know you are price shopping and may even decline taking you on as a client.

I get messages every once in a while that go like this: “Hey Brandon. Thanks so much for your contributions. What are your fees for xyz?” Now, since I post so much on BiggerPockets, that message is a little less bad because the person writing it has usually read a few of my posts and has a feel for the value I would add to a relationship.

But look at it from my perspective. It wasn’t an invitation to get to know each other more.

It wasn’t an invitation to have a phone call to learn more about my services.

It was simply a “What’s your price?” Honestly, that tells me the client may be high maintenance and may always try to push back on my pricing for requested services in the future. Do I want to add that client to my team?

And how do I even answer that? Real estate investors and business owners have insanely unique situations. Price varies with difficulty, organization, and scope — I can’t quote you a price unless I know more about you.

Instead, get a CPA on the phone and fully hear him/her out. Try to gain a solid understanding of the value that CPA will add to your team because as a real estate investor or business owner, you need a CPA on your team. Only then should you approach the pricing aspect.

I do not mean to imply that pricing should not be discussed; it absolutely should. But just like buying a foreclosure without doing your research, asking a CPA for their price without understanding their value proposition won’t do you any good. You’re collecting meaningless data from which you will not be able to make an informed decision.

Once you understand the value proposition, talk price all day.

Let’s Wrap This Beast of a Post Up

So there you have it. Hopefully this article provides you with a better understanding of what you should look for in a CPA and how to approach the relationship.

You want to find a CPA you can form a long-term relationship with. Once that offers a full range of services, including tax planning, and will talk real estate just because he/she loves it.

Understand that the CPA may be expensive and a great one will have your best interest at heart. We’ll work to provide you with so much value that you can’t wait until your next meeting with us.

The price conversation needs to happen, but wait until you fully understand the value proposition. You’re a business owner, and you should strive to always be making informed decisions. A price without the meaning behind it is just a number.

Have you found a great CPA to work with on your business? If so, how?

Let’s talk in the comments section below.

About Author

Brandon Hall

Brandon Hall, owner of The Real Estate CPA, is an entrepreneur at heart who happens to be good at taxes. Brandon is a real estate investor and CPA specializing in providing business advice and creative tax strategies for real estate investors. Brandon's Big 4 and personal investing experiences allow him to provide unique advice to each of his clients. Sign up for my FREE NEWSLETTER to receive tips and updates related to business and taxes.

13 Comments

  1. Steve Babiak

    The big mistake investors make is that start to look for that CPA between January and April. You should be having a discussion about your tax situation with your selected CPA no later than the last quarter of your fiscal year (year end planning), so you should have made the decision of whom you will be using prior to that time. And since most will have a fiscal year end the same as the calendar year end, that means you should have that CPA on board before September or so.

  2. Aaron B.

    Brandon, holy crap, this was the best article I gave read in quite some time. You brought a level of clarity with specific examples and clearly articulated reasoning. I especially liked your analogy, “Think of it like this: tax preparation is reactive, while tax planning is proactive.” Please keep your articles coming.

  3. Douglas Skipworth

    Brandon, that was a great, informative post!

    We spent the past 12 months searching for a new accounting firm to help us. In addition to all the excellent tidbits you gave above, we also decided it would take a year to find the right fit so we were going to talk with as many firms as it would take. Secondly, we then asked all of our most respected business friends and associates who they would recommend for tax planning work (not tax preparation work). We got a ton of awesome referrals and ended up choosing between several super firms.

    Now, we’re very excited about the future, which is a fun place to be, especially when you’re talking about tax work!

  4. Dustin Graham

    Hah! I had an amusing one recently. What’s your take on this…

    I contacted a CPA, and asked them if they specialized in REI. I explained that I was interested in purchasing a property in 2016, and I was curious if they could help me minimize my tax burden throughout the process.

    Their response was, “Do you want to come to my office and talk, my rate is $150/hr.”

    Feels like exactly the opposite of your cautions against asking for their rate up front.

    I guess since I don’t own a property yet, I should wait till after April since they’re all busy right now? My 2015 taxes will be straight W-2’s, nothing fancy, so I can just use one of the online services like I have in years past. Then start meeting with a CPA in June to plan for 2016 taxes? Thoughts?

    • Brandon Hall

      Dustin – if your 2015 taxes are simple, I’d stick to TurboTax. That said, when you pick up rentals, you really need a CPA. I wouldn’t use a firm that charges for a first 30 minute consult. That time needs to be spent learning about the client in a relaxing manner. If you are feeling the pressure of being billed by the minute, you may leave out a critical piece of information which will lead to the CPA providing bad advice. Protect yourself!

  5. Wonderful article clear and concise. Your article has me thinking about the cpa that I used this past year. I too like what you said about tax planning and tax preparation. Keep the articles coming…..KNOWLEDGE IS POWER!!!

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