If you plan to do more than a single flip (and even if you plan to only try it once), it’s important to have a CPA or accountant on your team to provide you the guidance you’ll need to keep as much of the profits you can from your successful rehabs.
Basically, a great CPA can provide the following services for you real estate business:
- Help you define the appropriate business structures, both from a legal protection and from a financial/tax perspective
- Help you create a tax strategy for my business that will allow you to legally keep as much money as I possibly can
- Help you make smart decisions with respect to your individual real estate investments
- Prepare your annual tax returns
- Recommend other team members (attorney, insurance agent, real estate agent, etc) who can help make your business a success
With those goals in mind, you should be prepared to interview multiple CPAs before picking one that you will work with; generally speaking, a relationship with an accounting professional is often-times a long-term relationship, so finding the right person early-on is key to long-term success. You can often get good CPA recommendations from other investors in your area, from folks in your local Real Estate Investor Association (REIA), or from other professionals you have a good relationships with (your attorney, you real estate agent, etc).
Here is a list of interview questions that should allow you to help find a qualified CPA who can successfully help you sustain and grow your business:
- What are your credentials?
- What services do you offer?
- What areas of tax and accounting do you specialize in?
- What is your background and do you personally own real estate?
- How would I be able to communicate with you? Can I get questions answered by email?
- Given my circumstances, what business structure(s) do you recommend? Why?
- Can you register the business structures for us?
- How can you help in the various phases of real estate investing (acquisition through sale)?
- Do you specialize in tax strategy? Specifically geared towards real estate?
- How aggressive will you be in helping us keep as much money as possible?
- What tax strategies/issues should I be aware of upfront?
- How often would you suggest we meet to review our progress/plan?
- Do you do tax preparation?
- What software do you use (and expect me to use) to do our accounting?
- Can you help me find other team members (attorney, insurance agents, real estate agents, etc)?
- What is your schedule of fees?
- Do you have references?