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Started By
Message
Do I Need a CPA?
Posted on 5/25/24 at 1:30 pm
Posted on 5/25/24 at 1:30 pm
-Dual professional income (wife makes roughly the same as I do).
-4 rental properties (3 houses, 1 condo).
-Joint brokerage account, mostly safe ETFs and S&P 500.
-Various Treasury bonds.
-2 children (each with a brokerage account).
I understand a CPA is not a money manager, rather someone to ultimately help reduce your tax bill.
We have always been self-conscious that CPAs are for businesses and wouldn’t waste their time with personal finances, but are now getting to the point where we don’t have the time to manage our careers, family, and finances all adequately.
What recommendations would you give for someone in my situation? Assuming I can find a firm willing to work with us, do they generally charge by the hour?
Thank you
-4 rental properties (3 houses, 1 condo).
-Joint brokerage account, mostly safe ETFs and S&P 500.
-Various Treasury bonds.
-2 children (each with a brokerage account).
I understand a CPA is not a money manager, rather someone to ultimately help reduce your tax bill.
We have always been self-conscious that CPAs are for businesses and wouldn’t waste their time with personal finances, but are now getting to the point where we don’t have the time to manage our careers, family, and finances all adequately.
What recommendations would you give for someone in my situation? Assuming I can find a firm willing to work with us, do they generally charge by the hour?
Thank you
8
Posted on 5/25/24 at 1:32 pm to RFK
I would say yes, simply because that's a ton of paperwork and it's worth paying someone else to do it.
Posted on 5/25/24 at 4:28 pm to RFK
You just use Turbotax now?
I wouldn't be surprised if your CPA bill is $2500 or more the first year with you having 4 rental properties. Probably a decent bit they'll have to do on their end to make sure they are all done to their liking.
CPA's aren't cheap these days.
Do you manage the homes yourself or have a property manager?
If you are confident in your tax ability, I'm not sure how much time a CPA will save you. Its not really a major time savings unless you have complex issues.
Its more a confidence issue. You still have to gather all of the information, answer a good bit of questions for your CPA, etc. I mean realistically I'd say you are going to save 10-15 hours a year at most. Its not like a CPA is spending 40 hours on your taxes. I only say 10-15 because lets say it takes you twice as long as it would take a tax professional and it takes them 4-6 hours.
Most CPA firms will have a non CPA do the legwork for many of the clients and then 1-2 CPA's will review it.
I wouldn't be surprised if your CPA bill is $2500 or more the first year with you having 4 rental properties. Probably a decent bit they'll have to do on their end to make sure they are all done to their liking.
CPA's aren't cheap these days.
Do you manage the homes yourself or have a property manager?
If you are confident in your tax ability, I'm not sure how much time a CPA will save you. Its not really a major time savings unless you have complex issues.
Its more a confidence issue. You still have to gather all of the information, answer a good bit of questions for your CPA, etc. I mean realistically I'd say you are going to save 10-15 hours a year at most. Its not like a CPA is spending 40 hours on your taxes. I only say 10-15 because lets say it takes you twice as long as it would take a tax professional and it takes them 4-6 hours.
Most CPA firms will have a non CPA do the legwork for many of the clients and then 1-2 CPA's will review it.
Posted on 5/26/24 at 7:45 am to RFK
quote:thats not true at all. Personal finances are definitely apart of a CPAs portfolio, especially with you having rental properties.
We have always been self-conscious that CPAs are for businesses and wouldn’t waste their time with personal finances
quote:Yes.
do they generally charge by the hour?
quote:Make sure you have your documentation in order. You can always have a consultation meeting and ask for a detailed list of items that will be required to finish your return and ask what you can do to streamline the process for them
What recommendations would you give for someone in my situation?
Posted on 5/26/24 at 8:52 am to RFK
quote:
-4 rental properties (3 houses, 1 condo).
This is the variable. Your other stuff is standard.
I've had easy as can be rentals and crazy complicated.
I've also seen so many errors when reviewing prior returns for rentals.
quote:
rather someone to ultimately help reduce your tax bill.
This as well as be there for you when you're about to do something. I always tell my Sch E clients, call me before you do anything re: buy/sell/improve as there's not much that can be done historically.
quote:
Assuming I can find a firm willing to work with us, do they generally charge by the hour?
Hourly billing is basically dead in the CPA world. Everyone is moving toward flat fee or monthly arrangements.
There's a huge movement towards cost of the return baked into a monthly cost with access year round/check ins if needed. Many firms aren't taking one return engagements anymore.
Posted on 5/26/24 at 12:34 pm to RFK
Yes, Yes, and more yes.
CPA's are relatively cheap. IMO they should be making as much as a high dollar attorney.
My CPA has saved me so much money.
From what you stated, you need a CPA. Its also a peace of mind that you are doing everything right regarding the IRS. Do you want a nasty-o-gram from the IRS saying you owe them back taxes? Nip it in the bud with a CPA, with a tax attorney being the last resort.
CPA's are relatively cheap. IMO they should be making as much as a high dollar attorney.
My CPA has saved me so much money.
From what you stated, you need a CPA. Its also a peace of mind that you are doing everything right regarding the IRS. Do you want a nasty-o-gram from the IRS saying you owe them back taxes? Nip it in the bud with a CPA, with a tax attorney being the last resort.
Posted on 5/26/24 at 3:04 pm to RFK
Anyone with ownership in multiple passive activities needs a CPA in my opinion.
If you have W-2’s and a couple 1099’s, I wouldn’t say it’s a necessity, but a lot of times it’s worth it. They may be aware of some things that you aren’t.
If you have W-2’s and a couple 1099’s, I wouldn’t say it’s a necessity, but a lot of times it’s worth it. They may be aware of some things that you aren’t.
This post was edited on 5/26/24 at 3:06 pm
Posted on 5/26/24 at 3:24 pm to baldona
quote:My tax situation is at least as complex as the OP’s and the firm I use annually charges around half of that amount.
I wouldn't be surprised if your CPA bill is $2500 or more the first year with you having 4 rental properties.
Been with them over a decade.
NOLA/BR metro firm, ~ 6 offices
Posted on 5/27/24 at 8:23 am to soccerfüt
quote:
My tax situation is at least as complex as the OP’s and the firm I use annually charges around half of that amount. Been with them over a decade. NOLA/BR metro firm, ~ 6 offices
Absolutely. But you’ve been with them for years and that’s the annual cost. But the first year is going to take considerably longer to make sure everything is correct and updated.
I threw out a price just to prepare the OP it’s not likely to be $800 the first year.
This post was edited on 5/27/24 at 8:24 am
Posted on 5/27/24 at 8:30 am to Mariner
quote:
My CPA has saved me so much money. From what you stated, you need a CPA. Its also a peace of mind that you are doing everything right regarding the IRS. Do you want a nasty-o-gram from the IRS saying you owe them back taxes? Nip it in the bud with a CPA, with a tax attorney being the last resort.
I agree with you. But I’ll play devil’s advocate. At the time my wife and I made under $150,000 as small business owner with under $2 mil revenue and a HR company doing payroll, with fairly simple taxes and I had multiple meetings a year to make sure I was doing everything correct to make it as easy as possible. My CPA bill was over $4,000. I got a check that year from the IRS for $1800 I overpaid.
That was one of the south’s largest CPA firms. I don’t expect perfection by any means. I’m not hating on CPA’s, but I also don’t think “hire a CPA you’ll save tons” is a guarantee.
Posted on 5/27/24 at 11:51 am to baldona
quote:
I threw out a price just to prepare the OP it’s not likely to be $800 the first year.
Actually, that's probably about the right price, regardless of first or subsequent years. The problem you will run into is this. Most CPA's use number of forms/worksheet to itemize the bill. That won't change based on years performed. If you pay a high bill the first year, assuming it's for the initial work, they will not likely have much incentive to lower the bill in subsequent years. It would create an overpriced mess. The CPA will likely charge the flat fee regardless of it being the first year, and that should be in the ballpark of what you stated.
Anything else would be likely an oddly overpriced bill.
Posted on 5/27/24 at 11:58 am to RFK
quote:
-Dual professional income (wife makes roughly the same as I do).
-4 rental properties (3 houses, 1 condo).
-Joint brokerage account, mostly safe ETFs and S&P 500.
-Various Treasury bonds.
-2 children (each with a brokerage account).
That's actually a pretty normal return for most CPA's. Self-employed returns start to get complex with multiple investment sources, depreciation schedules, schedule C/SE, percentage of office/properties, etc. Even then, with just about everything you buy getting a different treatment or some percentage applied, it's still usually less than $1k.
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