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May 12, 2023

Why Real Estate Investors Should Hire A Professional CPA Firm

Being a real estate investor can be highly profitable as long as you have a good team and business strategy in place. But whether you own rental properties, flip houses, or have investment groups, there are always risks when it comes to investing in properties.

That’s why working with a professional CPA firm can be beneficial since the right one can help you manage the financial aspect of your business. But if you’re not convinced, below is a list of reasons that may make you reconsider.

What does a CPA Firm do?

A CPA firm is an accounting firm that has a team of Certified Public Accountants (CPA). They provide financial management services, including bookkeeping, tax filing, and auditing. Compared to an accountant, you can consult a CPA when it comes to planning your business to help you optimize its growth.

Working with a CPA firm that specializes in real estate isn’t required, but as an investor, it’s highly recommended. Their knowledge of the market allows them to provide you with better services in handling your finances while keeping you compliant. Their experiences with working with other types of businesses can also provide them with a different perspective compared to having an in-house accountant.

Benefits of Working with a Real Estate CPA Firm

If you still think hiring a CPA firm isn’t worth it for your investment company, having these benefits will make you think the price of their services is another good investment:

1. Organize your business finances

If crunching the numbers and keeping track of financial records isn’t your strongest suit, hiring a CPA firm can relinquish you of these responsibilities. So instead of spending several hours organizing your books, you’ll have the time to focus on other aspects of your real estate investments.

You won’t also have to worry when tax season comes close since they’ll also take care of calculating and preparing your taxes. A good CPA firm will also have the knowledge on how to minimize your tax liabilities and help you strategize on how your business can save money.

2. Create a smart business structure

Most real estate investors choose to run their business as a sole proprietorship since it’s the most convenient method. But that structure isn’t always the best move when it comes to tax implications. For instance, owning rental properties can provide tax benefits that you can maximize if your business is under a legal structure.

A real estate CPA firm will help you determine which business structure will work best for your investing company. They will also be able to help protect your poverty investment from liabilities or other tax complications in the future.

3. Keep track of real estate tax code changes

When your real estate investments are on the line, it’s always a good rule of thumb to stay compliant when it comes to your business’ tax return. Since tax codes have the tendency to update over time, the slightest changes could produce a significant impact on your business if you’re not careful.

But if you’re working with a CPA firm, you won’t have to worry since they stay updated on any tax law modifications. Plus, if you’re wondering how a tax law can affect your business you’ll be able to address your questions or queries directly to a professional.

4. Get advice on business decisions

Aside from handling your taxes, an experienced CPA firm will be able to help you grow your business. Since they’ll have access to your annual financial records, they’ll be able to analyze a smarter business strategy like improving your cash flow and limiting your expenses.

A good CPA firm will also be up to date on financial trends to help you pinpoint the best real estate investments or avoid bad ones. Whether you’re planning on selling or buying, an experienced professional will also be able to help you determine the optimal price point for a property to minimize financial loss.

5. Audit representation

In case the Internal Revenue Service (IRS) requests an audit of your real estate investments, a CPA firm is eligible to represent you. This way, you won’t have to go through the tedious work of requesting records to provide substantial proof of your tax return.

Besides, as long as your CPA firm has kept your financial records organized and accurate, going through an audit won’t be as much of a hassle as it could be.

Looking for a reliable CPA Firm?

If you’re looking for a CPA firm to work with your real estate business, Lear & Pannepacker has a team of experienced professionals. Whether you need assistance with bookkeeping or looking for advice on your business taxes, their expert CPAs are equipped to guide you. For questions or inquiries, feel free to contact their team now.

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