When was the last time you saw a successful business owner doing their own taxes or managing their books of accounts themselves? Probably never. It’s a common misconception that small business owners, landlords, and investors can save a lot of money by doing their accounting and taxation themselves.
As a business owner, time is your most valuable asset, and if you trade your time to save a few pennies, the odds are you may not be able to reach your business goals.
So to answer our question, do I need a CPA as a real estate investor? – The answer is a resounding Yes! Read on to understand why.
Benefits Of Ongoing Financial Planning With The Help Of A Real Estate CPA
A comprehensive financial plan can provide a variety of benefits. It is advisable to plan your finances regularly to ensure you have enough money to cover your expenses for each month. A financial plan can also help you save for important goals, like retirement or a down payment on a new rental property. You can also reduce the stress of managing your finances by creating and sticking to a plan.
There are several benefits of regular financial planning, such as –
- Optimization Of Income For The Year
- Maximization Of Income Through Property Purchases And Sales, Including Any 1031 Exchanges
- Holistic Overview Of Business Profit And Loss
- Retirement Planning
- Estimation And Minimization Of Taxes
If you’re like most small real estate investors, you plan and file your taxes at the last moment. This doesn’t give you the opportunity to optimize your tax returns and claim benefits you should be utilizing. So how can you fix this? By reviewing your financials regularly with the help of an expert real estate CPA.
Frequently Asked Questions About Real Estate Financial Planning
Do I Need To Know Accounting To Be A Real Estate Investor?
No, you don’t need to be an accounting master to be a successful real estate investor. Nevertheless, accounting basics help make sound investment decisions.
To make informed investment decisions, real estate investors need to understand how to read financial statements, and knowing the fundamentals of accounting will definitely be beneficial.
If you’re not too confident about your accounting skills and knowledge, you can always work with a professional real estate CPA like Sigma and let them handle the nitty gritty while you manage the rest.
What Is An Escrow Account In Real Estate? Do Real Estate Investors need an Escrow Account?
The term escrow account refers to an account held by a third party to guarantee the completion of a transaction. In the context of real estate, it is typically used to hold money to pay for property taxes, insurance, or other closing costs.
Having an escrow account isn’t a necessity for real estate investors, but it is a smart move. An escrow account where the tenant deposits rent money and the landlord deposits the security deposit managed by your real estate CPA protects both the tenant and the landlord in case of a dispute.
Is Property Accounting Stressful?
Yes, property accounting can be very stressful for inexperienced or new real estate investors and landlords. Fortunately, if you seek the help of a real estate accountant with experience in this field, you can make it as stress-free as possible. Real estate accounting firms typically have specialized skills that enable them to handle all aspects of your accounting efficiently and accurately.
As Someone In The Real Estate Industry, Why Do I Need A Professional CPA?
There are many reasons why a real estate investor needs a professional CPA. First, a CPA can help you understand your financial worth. Second, a CPA can provide expert guidance, investment analysis, and strategies to maximize profits and minimize risks in the real estate market. Third, they help you track and report your investments on a regular basis. Fourth, a professional CPA provides advice on which tax system to use and deductions to claim to maximize your return on investment (ROI)
There are many other benefits of working with a real estate CPA in Maryland.
How Much Do Real Estate CPAs Charge?
There is no one-size-fits-all answer to this question, as the cost of a real estate accountant will vary depending on your specific needs and situation. The pricing structure for every real estate accountant or small business CPA differs depending on their experience and expertise and various other factors.
The average real estate CPA costs around $250 to $1000 per month. Tax preparation services for landlords may or may not be included in this price. The price, however, generally includes both consultations and audits.
Generally Speaking, Real Estate CPAs charge between $250 to $350 per hour.
In conclusion, real estate investors need CPAs to help them save time and make more money. By taking advantage of the services of real estate CPAs, investors can streamline their business and maximize their profits. They are an invaluable resource and can help you take your business to the next level.
If you don’t have a reliable and dependable small business CPA or real estate CPA in your network, then please feel free to book a free consultation with Sigma. Our no strings attached consultations help you understand how you can achieve financial freedom by maximizing profits and minimizing taxes to build generational wealth.