It’s tax time and a perfect opportunity hire a good CPA to advise and prepare your tax return. Have a CPA already? Great! It is also a great time to assess whether they are an asset to your business, and whether they are fully addressing the current and future needs of your real estate business.
What is your time worth?
Here’s why it’s a good idea to hire a professional: The money spent hiring a professional in most cases outweighs the time and expense of doing your taxes on your own.
Also, hiring a qualified CPA who fully understands your business and goals can contribute to your success and save you money! You have enough stress dealing with the everyday demands of being a real estate agent. Outsourcing annual Federal and States tax returns to a qualified CPA can enhance your business while alleviating anxiety and stress when dealing with the IRS. So, do what you do well, which is your real estate business, and outsource your financials to someone who is highly trained and can offer you legal protection if needed.
Before delving into the importance of having your financials done by a professional, let’s look at the difference between hiring an accountant vs. hiring a CPA.
Accountant vs. CPA – Does It Make A Difference?
A CPA is not the same as an Accountant. Many people use accountant interchangeably with CPA. However, an accountant has a bachelor’s degree in Accounting. A CPA, or Certified Public Accountant, has a bachelor’s degree in Accounting, but they also complete additional education, experience and testing.
CPA is a designation earned after completing state and local requirements. Each state has different requirements. Because of the extensive studying and exams required to earn this designation and maintain it, a CPA is often recognized as an expert in the field and is paid more because of their expertise. A CPA can also assist you with your taxes in more ways than an accountant can. Keep in mind that CPA is an American designation, not an International one, so a CPA’s practice is in the United States.
Important things to look for when hiring a CPA
1. Find a CPA with Industry Experience
Search for a CPA that specializes in your area of the real estate industry. If you specialize in Commercial real estate, then look for someone with Commercial expertise vs. Residential expertise.
Hiring a CPA that focuses on real estate helps you understand what you face and can address your concerns on most aspects of the financial side of your business. They can help you in the most cost-effective manner that has your highest and best interests at heart.
2. Ask For Referrals
Get 3 to 5 referrals and interview them prior to hiring a CPA. Get referrals from various trusted sources and do your background research on them.
- Word of Mouth: Ask your broker and agents in your office who they recommend. Have they done an outstanding job for them? What do they like about their CPA? Also ask real estate agents in your network for referrals. Reach out to your title company and mortgage company. Local networking real estate groups is another good place to garner positive referrals for a CPA.
- SCORE: Score is a good organization to get to know and attend educational classes relating to your business. SCORE stands for the Service Corps of Retired Executives. It is a non-profit organization. Currently, there are over 389 chapters located throughout the United States. Check to see if there is one in your area and give them a call to set up a meeting and see what they have to offer. They specialize in counseling business owners and entrepreneurs looking to take their business to the next level. As this is a government funded organization, they offer many of their services at no charge.
3. Check Online Reviews and If They Are Registered In Your State
Make sure whomever you speak with is registered to do business in your state. Many times, you can find this information on their website. Also, check for online reviews, but don’t stop there. In today’s world, online reviews are a first step, yet don’t tell the whole picture.
4. Meet Them or Schedule A Telephone Interview
You are looking for a good fit, not just a top CPA. They need to listen and understand your needs.
One real estate agent told me she felt her previous CPA did not do the best job possible, as she ended up owing a lot of taxes. When she interviewed another CPA the following year, she found out that she could have saved a lot more in taxes because he asked her different questions. These questions helped the new CPA understand her business, and positively help her.
This is why it’s important to meet with more than one CPA and talk to them before deciding on who to hire.
5. Set Expectations
Find out what is required of you. Also ask how long it will take to process your return. What is the best form of communication to reach them? Will they have time to speak with you when and if you have questions? Will they have your back in the event of an audit or IRS issue? If so, what are their fees?
It’s also important to ask them: Who’s will actually be preparing your tax return? Is the CPA going to be preparing your tax return or is someone else in their company going to? Know who is preparing it! Having the CPA review your tax return prepared by someone else is much different than when he/she prepares your tax return personally. Your CPA needs to know the Ins and Outs of your business and have all your financial paperwork required by the government.
Steven Grishman, CPA for 360 Business Management, advises that the role of an experienced, professional CPA is to take the chaos out of your business. He advises to engage the advice of a CPA. To grow your business, keep the correct records, and maximize your deductions.
For your business, he recommends you dedicate one day a week or month to go through your receipts and keep your books. If you need to, hire someone to help you itemize your income and expenses, or get a software program such as Quickbooks, Quicken or Excel.
He also emphasizes to ask your CPA which entity best suits your needs. Some examples include: Sole Proprietor, LLC or S Corporation. This can make a huge impact for your business. Also, bring your previous years returns so your CPA can view your history and see the best way to direct you and grow your future business.
The time to begin gathering all your information is now. Use this information as a resource to put your best foot forward financially for this new year.
Written for Form Simplicity by Janice Zaltman, a Realtor, LEED AP, Marketing Coach and Writer with more than 20 years of experience in the sales, marketing and media fields.