Skip to main content Skip to search

Archives for Real Estate Tax

Need A CPA As A Real Estate Investor

Do I Need A CPA As A Real Estate Investor? Advantages, Costs and More

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.

Final Thoughts

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.

Read more
real estate accountant

Landlords, You Need A Real Estate Tax Accountant – Here’s Why

Real estate accounting can be complex and, in most situations, downright grueling. Are you searching for a real estate CPA that can help you simplify your life? Do you want to learn how to find the right real estate CPA? In today’s article, we’ll answer all your questions and help you find the right CPA specializing in real estate.

Who’s A Real Estate CPA Or Real Estate Accountant?

The role of a real estate accountant usually entails submitting financial strategies, managing budgets and books of accounts, and preparing tax returns that make use of all available deductions. Additional tasks often include analyzing investment opportunities and evaluating assets for the investor.

Why Do Real Estate Investors And Landlords Need A Real Estate CPA?

As a real estate investor, you would already be using softwares that makes your life easy. But there are some things a computer can’t do well, and that’s where you need a real estate accountant that helps you keep your business and investments on track and under control.

1. It Will Save You Money

Investors tend to contact their accountants only during tax time and then essentially disappear all year round. Unfortunately, this strategy is old and doesn’t work anymore. If you have a real estate accountant by your side throughout the year, you can develop new strategies and utilize legal loopholes to save money on your income. Did you know? You can deduct passive losses from your income if you work a fixed number of hours every month maintaining your properties. These are the kind of things only a professional real estate CPA would know. So speak to one today!

2. It Ensures You Are Always Keeping Up With The Latest Bookkeeping Trends And Laws

Every year, significant changes are made to the U.S. tax code. Federal and local laws also change, and you might not always be familiar with these changes. That’s where a real estate accountant comes in, as they are always up to date on any and all changes to bookkeeping codes and laws. If you have a close relationship with your accountant, you will be able to anticipate unexpected changes and be prepared to mitigate any financial losses or even take advantage of these changes.

3. It’ll Help You Optimally Structure Your Business Payments

Real estate CPAs specialize in structuring your payments to minimize your risks while keeping the deal on track. For example, if you run a rental business, they can guide you on the best way to route your income, whether it be through an LLC, a C or S Corp, or through your individual account. An experienced real estate CPA will always have your best interest in mind and help you optimize your payment schedules, secure financing, and even manage your books to safeguard your income against any sort of risk.

4. They Will Help You Minimize Your Risks While Maximizing Growth

Small things can often be missed out even when we use softwares and tools to manage our business and books of accounts. But, when you have a professional CPA specializing in real estate managing your accounts, you ensure that your books are handled accurately and efficiently. This means that you claim all deductions that apply to you and improve your free cash flow. They also advise you on how you can leverage your current investments to get financing for your new properties without spreading yourself too thin and risking your financial freedom.

5. They Act As A Matchmaker Between You And Potential Investors And Investments

Real estate CPAs usually are well aware of potential deals on the market and have connections with high-ticket investors who can help you finance your assets in case you ever need to. As they often have a hand on the market’s pulse, they know all the best investments and inform you if anything suiting your profile comes up in the market. Now we know why you need a real estate CPA or a real estate accountant. So let’s take a quick look at how you can find a reliable real estate CPA.

How To Choose The Right Real Estate Tax Accountant

A quick google search for real estate CPA in Maryland will bring up tons of results for you to choose from. It’s essential to consider a few key aspects when selecting a real estate accountant for your business. Some of these are –

  • Experience Working With Real Estate Investors And Agents
  • Proven Track Record As Displayed By Client Testimonials
  • An Interest In The Field Of Real Estate
  • Hands-On Experience With Software You Use For Your Accounting And Bookkeeping
  • Availability Of A Bouquet Of Related Services

Why Choose Sigma?

Sigma is Maryland’s leading real estate accountant offering bookkeeping services, accounting services, and tax preparation services to real estate business owners and investors. Our services take the burden of administration away from you and help you –

  • Track Your Expenses
  • Classify Income Appropriately
  • Review Deductions For Rental Properties
  • Claim Ordinary And Necessary Expenses For Investment Properties
  • Recover Cost Of Improvements For Rental Properties Through Depreciation And Tax Deductions.
  • Claim Qualifying Tax Deductions And Tax Benefits For Expenses Paid By The Tenant

We support you throughout the real estate investment life cycle and help you at every step of the way. Please speak to us to learn how we can save your time and help you grow your business.

Read more