Finding the right accountant is something a lot of real estate investors (both new and experienced) have an extraordinarily difficult time with.
An accountant is an undeniably important member of your team that can play a HUGE role in your ability to:
- Find and leverage as many tax advantages as possible (of which there are MANY for real estate investors).
- Follow the legalities of our ever-changing tax code.
- Keep track of your ongoing business transactions.
- Stay organized, using a financial record-keeping system that makes sense.
This person is a vital component of your business. If you’re trying to wear this hat by yourself, I can almost guarantee you’re either leaving money on the table OR working a lot harder than you need to.
Similar to a property management company, the right accountant can be worth their weight in gold. These people can save you MUCH more than they’ll cost and in the long run, they will easily justify the expenses they incur for your business. When you’ve got the right accountant, you’ll be thrilled to pay them every year (because it’s one of the most worthwhile expenses you’ll have).
How To Interview An Accountant
As a real estate banker, I’ve had to look through thousands of tax returns over the years. Believe me – not all accountants are created equal. Some of them are disorganized, make mistakes, don’t communicate well and don’t understand how to find the right tax breaks for real estate investors. On the other hand, some of them are brilliant, easy to work with and save their clients gobs of money (paying for themselves many times over), all because they know what they’re doing.
Luckily, I have a bit of insider knowledge in this realm because not only do I have a lot of personal experience looking at various accounting work in my banking and real estate investing career, but I’m also married to a CPA. My wife has worked in the field of public accounting since 2006 and she has a wealth of experience with dozens of different businesses.
I sat down with her this past week and we compiled a solid list of questions (both from an investor’s perspective and a CPA’s) that you can use to find the right accountant for your business. These questions will help you get a comprehensive understanding of who you’re dealing with BEFORE you commit to paying them a dime.
Once you’ve landed on two or three accountants/firms, give them a call and run through the following questions:
- What types of businesses do you typically work with?
- Do you specialize in any particular niche of business accounting?
- How many of your clients have a similar structure to my business? (note: you’ll have to explain how your business works before they can answer this)
- Are you a stand-alone shop, or do you work for a larger CPA firm?
Regarding Their Level of Expertise:
- Are you a CPA? Do you have any other certifications that would give me a reason to hire you? (note: a certified public accountant is a “bonus”, not a “must”, for what we need them to do)
- What kinds of services can you provide for me (e.g. – quick books, tax returns, tax planning, tax advice, anything else)?
- How many years of experience do you have as an accountant?
- What percentage of your clients own income-producing real estate?
- Do you own any investment properties yourself? If so, what kind are they (e.g. – rental properties, vacation home, farmland, properties you’ve sold on land contract, etc.)?
Setting Proper Expectations:
- How much capacity do you have for additional work at this time?
- Would anyone else in your office be handling my books? If so, what is THEIR level of expertise in real estate accounting?
- What kinds of ongoing things will you need from me in order to do your job? What will I be expected to do?
- What do your services cost (based on the specific duties I need you to perform for me)? Do you charge hourly, monthly, annually?
- Are there any particular ways you can help me save money on taxes?
- Will I have to sign a contract/agreement if we decide to do business together? If so, can I review it beforehand?
- Can you give me any references? (note: not all accountants can provide this to you because it may breach their confidentiality agreements. This question is worth asking – but if they can’t provide any references, this shouldn’t be a show-stopper by itself)
Depending on the answers you get from these questions, you could expand even further with the conversation – but in most cases, the information you’ll learn right here will give you some very strong indicators as to whether or not you’re dealing with a competent real estate accountant.
The Devil is in the Details
I cannot emphasize this enough. If you’re running a business that is even remotely complicated, it is very important that you’re working with an accountant who pays attention to the details.
Most accountants (at least, most of the ones I’ve met) aren’t necessarily the most “charming” or “colorful” personalities you’ll ever meet. If you’re interviewing an accountant who isn’t coming across as a natural-born salesperson, this isn’t a bad thing (in fact – if anything, I’d say this a good sign). When it comes to the core competencies of an accountant (i.e. – the person who will be doing the actual work for your business), personality is NOT a prerequisite – it’s just an added bonus.
As human beings, most of us will naturally gravitate towards the people we “like”, but remember – we want to find the person who is best equipped (with the right experience and know-how) to serve this aspect of your business. This doesn’t mean they need to be charming. Your goal with this interview is to uncover the facts, not the fluff. At the end of the day, an accountant’s skills and attention-to-detail has very little to do with their personality – so make sure you’re looking for the person who come across as the best qualified. All else is secondary.