If you don’t want to have a heart attack in ten years, or maybe even sooner, I highly recommend hiring a CPA and bookkeeper.
When searching for an investment CPA, first and foremost, you want to make sure they already work with clients who are doing what you are doing, which in my case are apartment investors, or more specifically, apartment syndicators. Therefore, the first question I would ask in an introductory email or phone call is, do you currently work with other apartment syndicators?*
*If you aren’t an apartment syndicator, whenever it is referenced in this post, exchange it out with your focus. The process can be applied to hiring a real estate CPA in any niche.
If they don’t know what apartment syndications is, that’s obviously an indicator that they don’t work with syndicators.
If they know what apartment syndication is, but they don’t work with any syndicators, that’s not necessarily a deal breaker. However, I would recommend finding someone else because you don’t want them learning the ins-and-outs of apartment syndication on your dime. You want an investment CPA who already knows the types of tax deductions you can take and knows the apartment syndication business model.
If they do know what apartment syndication is AND they currently represent syndicators, then the next step is scheduling an in-person interview, with the purpose of getting into their tactics. To accomplish this goal, ask the following 9 questions:
- How are your fees structured? Get an understanding of exactly how you will be charged. Will there be fees for each time you call in? Can you give them a quick call every now and then and not be charged? Do their fees include the tax return at the end of the year or is that separate? Do they charge a monthly retainer for conversations? How do they structure bookkeeping fees?
- Who will be your point person? When you sign up for their services, who will you be engaging with? Will it be someone right out of college, a partner, or a mid-level real estate CPA?
- How conservative or aggressive are you with the tax positions you take? Additionally, does the conservative/aggressive nature of the CPA align with your desires? If taking aggressive stances, how will that be communicated to you for you to understand and accept? You may rely on the investment CPA to prepare your tax returns but, ultimately, when you sign your tax return, you are taking responsibility for it.
- Does the CPA offer a secure portal to transfer sensitive files back and forth? Tax documents contain a lot of personally identifiable information (social security numbers, adjusted gross income, etc.) via regular email. Stolen identities can wreak havoc on your personal and professional lives for years
- How proactive are you with tax planning and how to your tax planning services work?
- Are you able to file tax returns for all state and local governments in the country?
- If you previously had a failed relationship with another real estate CPA, be upfront with your new prospective CPA about why it failed.
- What is expected of me as a client? Expectations should be set early and communicated clearly
- May I have some references? No matter how great the interview goes, always ask for references in order to make sure they are legitimate.
After interviewing a handful of investment CPAs, analyze their responses, determine which one aligns with your interests and goals the most and move forward with using their services.
One final note about CPAs/bookkeepers: as your business grows, your needs evolve. Moreover, a real estate CPA who you selected as a beginner wholesaler may not be the best CPA after your wholesale business has grown dramatically, or if your business model has expanded to include other niches. So, as these changes occur, it may make sense to conduct additional interviews – even if only to confirm that you’re current CPA is still the proper choice – and make any personnel changes if necessary.