There’s nothing wrong with a do-it-yourself mentality. And while there are plenty of things you can do on your own in your real estate business, taxes and accounting aren’t among them. In this case, you need the assistance of a qualified CPA.
How to Pick a CPA for Your Real Estate Needs
There’s a difference between being good with numbers and knowing how to organize financial documents and numbers in a manner that’s both accessible and approved by the IRA. Just because you can run some computations in your head and know which documents need to be archived for future reference doesn’t mean you’re cut out to handle your own accounting and tax needs.
A qualified CPA does a number of things for your real estate business. For starters, she helps you stay organized by neatly gathering and storing all financial documents into the appropriate files and spreadsheets so that you have an accurate outlook on the money that’s coming in, the money that’s going out, and what your current real estate holdings look like. Secondly, a CPA offers some legal protection in the sense that she’s trained to understand the stringent rules laid out by the IRS and can increase your chances of staying within the law.
Finally, the right CPA should be able to save you some money by helping you move money around in a way that’s advantageous to your bottom line. In fact, a good CPA should save you a lot more money than he costs you over the long haul.
The question is: How do you pick the right CPA for your needs? There are lots of CPAs out there; you can increase your chances of choosing a good fit by adhering to the following four tips.
1. Look for real estate specialization.
You could argue that a CPA is a CPA, but there’s something to be said for finding a professional who specializes in real estate. This specialization tells you that they’ve seen the same problems you’re facing and know how to deal with them in the most efficient and cost-effective manner possible.
2. Research credentials and accreditations.
Specialization is one thing—but does the CPA you’re considering have the appropriate credentials and accreditations on his resume? Lots of people pass the CPA exam each year and are technically certified to practice accounting, but you don’t want someone who barely squeaked by. You want a CPA with a pass rate that’s higher than the national average. It’s also smart to look for CPAs who have gone on to pursue other accreditations even after passing the exam. This shows that they have a commitment to learning.
3. Ask around for referrals.
Do you have friends and connections in the local real estate market? One of the best tips is to ask them for referrals. If they have a good CPA, they shouldn’t have any problem passing his information along. They may also tell you not to use someone, which is equally valuable advice.
4. Read online reviews.
Always do your own poking around when it comes to hiring a CPA. In addition to asking for referrals from friends, it’s smart to read some online reviews and check out independent rating sites to see what clients and peers think of CPAs you’re considering. You’ll see red flags and glowing recommendations, which will hopefully add some clarity to your vetting process.
No Need to Rush
There’s no need to rush into hiring a CPA. Assuming you aren’t up against some important tax or financial deadline, you should have time to sort through your options and make the best possible choice.
What qualities do you look for in a CPA? How do you go about finding the right one for your business?