Many real estate investors and small business owners wait too long to hire a CPA (Certified Public Accountant). By the time they realize they need help, they have created so many problems with their bookkeeping and accounting, that it ends up costing them much more to correct their mistakes than it would have cost to have a professional do it from the beginning.
While many people begrudge having to do their taxes, I never thought it was that bad when I only had one source of income. I always did the least expensive version of Turbo Tax where you pull up your W-2, punch in the numbers, submit it, and you get your refund deposit a week later. Easy day! Even after I purchased a primary residence, it was still pretty straightforward.
However, once I started renting out my Pensacola house on Airbnb and transitioned later in the year to long-term tenants, I realized my tax situation had become more complicated. I had to do more extensive research to make sure I did my taxes correctly. I considered hiring a CPA that year, but I was interested in learning about the process myself to better understand it. After some time spent researching, I did the taxes correctly and learned a lot about the tax benefits of real estate. However, I decided whenever I had more than one property to do the taxes for, I would hire a professional accountant.
Fast forward one year, and I owned a total of 3 properties by that time. I reached out to a mentor of mine – Stu Grazier of Storehouse 3:10 Ventures – and asked for his advice. He immediately recommended I hire a CPA. He referred me to his CPA – Linda Weygant of Clue Business Services. Thankfully, I kept solid bookkeeping records for all properties (in Google Sheets) which made it an easy transition. She charged me a very reasonable amount to do my personal taxes plus 3 rental properties. I was blown away at how professional she was and what a great value she provided.
Everyone has different comfort and proficiency levels when it comes to taxes, accounting, and bookkeeping. Some people should hire one even if they just have a W-2 job, while others may enjoy the process and want to do their taxes personally.
You Should Hire a Professional Accountant If…
- You feel overwhelmed with the idea of taxes. Whether you’re a business/real estate owner or not, if you don’t think you can accurately report your taxes you should hire a professional. Taxes are a big deal and incorrectly reporting your taxes can have expensive consequences!
- Your time is better spent doing other things. This is why I hired a CPA. I knew I could figure out how to do the taxes correctly, but I also knew that my time is better spent focusing on acquiring more real estate and growing the business than doing my own taxes and keeping up with the accounting throughout the year.
- You have a complicated tax situation. Many people have tax situations that are so complicated, they should just hire a professional. Owning property or businesses in multiple states, varied income streams, and being notified by the IRS that you’re being audited are all great reasons to hire a professional.
- You already pay a lot in taxes. If you are a high-income earner or have a high net worth, then a CPA can probably help you legally lower your taxes through creative strategies. The amount of money you will save on taxes is typically way higher than what you pay for the services of a tax professional.
Hopefully, these points have helped you decide if and when a CPA is right for you. I have frequently heard successful entrepreneurs and real estate investors say they wish they had hired a CPA earlier than they did. If you’re on the fence, I recommend talking with friends and family members who already have CPAs and get their opinions.
If you want to learn more about this topic, check out the article my buddy Dave Pere just wrote about CPA’s. He’s the founder of From Military to Millionaire, and he’s definitely worth following on YouTube and Instagram as well!
I hope you found value in this article! If you want to connect, please reach out to me on Instagram @honorandequity or send me an email at doug@honorandequity.com!