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Updated almost 6 years ago, 02/07/2019
What Are Typical CPA Fees?
I'm curious what people are seeing as typical fees for CPA's? I recently listened to the podcast with Brandon Hall (19...8?) and was pretty impressed with his knowledge. After looking on his website his fee for a basic plan is $150/mo. To me,that seems pretty steep, however I have nothing to compare it to. I want to minimize my taxes by working with a good real estate cpa, but I just want to make sure I'm not getting an overpriced service. A little background on my portfolio, my wife and I have one duplex in California, but file personal taxes in Oregon. Thanks!
I don't publish my rates out right; however, I have two different types of engagements. Monthly such as @Brandon Hall was discussing and I have clients who engage me for tax prep only and they have different charges. I stay very competitive. I'd rather have a limited number of clients that I can serve well rather than a great deal that I barely know.
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@Steven Hamilton II I just feel like you put a lot of effort into dis-crediting CPAs as tax professionals because it's not necessarily what they need to specialize in. That being said, many CPAs do and can be just as, if not more knowledgeable than an EA.
Your view are very biased and one sided. A CPA requires 40 hours annually, and if they work in tax, the odds are those ongoing education hours will be in taxation. You don't need to jump forward whenever someone asks for a CPA and try to convince them they do not. It's off putting.
Originally posted by @Natalie Kolodij:
@Steven Hamilton II I just feel like you put a lot of effort into dis-crediting CPAs as tax professionals because it's not necessarily what they need to specialize in. That being said, many CPAs do and can be just as, if not more knowledgeable than an EA.
Your view are very biased and one sided. A CPA requires 40 hours annually, and if they work in tax, the odds are those ongoing education hours will be in taxation. You don't need to jump forward whenever someone asks for a CPA and try to convince them they do not. It's off putting.
Wrong again. Keep in mind the CE required depends upon the state as well. Some of the best I know are CPAS. I have seen both CPAs who were worthless and EAs who were worthless. I've also met some with no credentials that know more than any CPA I've ever met. It depends upon the person. I do not discredit CPAs at all. I have some that are clients. Many assume CPA when they do not necessarily need a CPA credential specifically. I have some clients who no matter how many times I correct them they still refer to me as a CPA. Which at some point I will take the exam but I'm in no rush as it there is nothing a CPA can do that I can't other than audit a financial statement. And I have zero desire to do that. I also couldn't audit it if I prepared it.
I am against credential bashing all together. I simply point out that there are multiple options available.
Glad to hear from a fellow EA that hates audits! I'm qualified to sit for the CPA exam but don't see the point as taxation is the subject area I like and audits make my eyes glaze over. I, too, often get referred to as a CPA (or "like a CPA"). The IRS needs to promote us better. :-)
What I do love about the CPA/EA CPE is that you can earn your units in so many different topics, which really lends itself to specialization. I'm in the middle of a great [40 hour] course on real estate taxation.
And to the OP, there are lots of options so just interview around and see who you click with!
Originally posted by @Jana Cain:
Glad to hear from a fellow EA that hates audits! I'm qualified to sit for the CPA exam but don't see the point as taxation is the subject area I like and audits make my eyes glaze over. I, too, often get referred to as a CPA (or "like a CPA"). The IRS needs to promote us better. :-)
What I do love about the CPA/EA CPE is that you can earn your units in so many different topics, which really lends itself to specialization. I'm in the middle of a great [40 hour] course on real estate taxation.
And to the OP, there are lots of options so just interview around and see who you click with!
I love audit representation; however, I have zero desire to audit financial statements.
@Jake Thompson the cost is going to vary depending on location, income portfolio and depth of what you have the CPA doing. In my personal case, we have eight properties and track monthly income and expense ourselves. We only use a CPA for taxes and everything we give them is well organized and documented. They charge under $150 one time per year, but that is a small town CPA charging under market value for their experience level.
In your case, assuming you have just the one duplex, then I think $150 per month seems excessive, unless they are keeping your books too. I would expect you should be able to get taxes done for $500 with a single rental property, but I am not familiar with your local market so shop around and look for referrals from local investors.
Regardless of who does your taxes, you need to spend a couple hours reviewing and understanding what they did. You sign the document and you are liable. If your CPA is overly creative, then you are left defending it to the IRS.
I am CPA. Several things affect a CPA's rate if using hourly rates. One is the experience factor. A CPA with 20 yrs experience will bill at a higher rate usually than a new licensee due to a (hopefully) well developed body of knowledge). Also industry experience. Somebody with a niche practice may be more than a local CPA or CPA firm. IN that case view the fee as an investent unless its mechanical data input style tax preparation. I was trained to ask open ended questions with clients in order to unearth tax planning opportunities. Its taken me years to know what to ask, where to look, where not to waste time talking, when teach, and when to shut up and listen. Actually for me listening is where my learning takes place. Be it in a class, or be it being educated about the unique economic facts and circumstances by listening carefully to asnwers. But I digress.
These cost drivers seem pretty obvious when you think about them. There is one other not-so-obvious factor - geography. The Northeast corridor - DC to Boston has a higher cost of living, and rates are usually higher than other parts of the country. I do work in Lincoln Nebraska, and am familiar with CPA rates out there, and they are less than what I am my colleagues bill here in the Philadelphia area. (There is a tax seminar I go to annually, and in the several hundred page text there is always a half dozen pages showing rates from around the country - from partners to junior, area by area, so thats how I know)
As a buy-and-hold investor for 12 years, I can also make the same statement about rents. If I go SFH or duplex apples to apples, NJ rents are higher on properties I've analyzed, and that's because of the cost of living. We have either bought or looked at properties in Texas, Nebraska, Illinois (Chicago burb) and Florida.
So there are many factors. If there was a way to draw all this together in selecting a CPA - look at their experience, ask for references, ask if their license is current, and most important, ask them to explain something about real estate - like how to determine the adjusted basis of a rental or what a real state professional is under IRC section 469. Ask them a beginner topic - "Can you explain depreciation to me?" Listen carefully. Do you get a definition, as in a one sentence answer or do you get an actual explanation, like "It means...and it comes from....and as far as your tax return, it means... That's teaching - communication of information. However that question gets answered is how most or all of your questions are gonna be answered. And to get that much depth and understanding of the tax code and other stuff takes years, even decades to glean, craft, shape and deliver in a somewhat interesting way. All that will probably come at a higher price, but you can be significantly empowered as a result, in which case the juice is definitely worth the squeeze.
Just my two cents (no sales tax)
Jim Kennedy, CPA
They are equivalent to typical weather ... depends upon where you are!
Thank you all for the advice! This has given me a pretty good idea of what I need to be doing when searching for a CPA!
We pay around 1200 per return for our 6 different LLC returns. We pay about $150 per month per LLC for payroll monthly reports etc.
We are searching for a Tax Strategy real estate focused CPA to work with our current CPA.
We talked to one “Big name” on here and he wanted $10,000 to review and develop a strategy. Wow !
Anyone had a good experience?
Recommendation?
Cost ?
Thanks Lance list starting to gather a list now. Was hoping some real life experience with some like minded multi family owners would minimize the choices a bit as there are so many. He maybe that is the next Bigger Pockets evolutionary step. A ranking or review of services rendered.
I was paying $500 for W-2 wages, 1099s for stock investments and income from 3 rental properties. But now the Tax preparation company wants to charge me $150 per rental property, raising my costs to $950! I plan on buying another rental and it really doesn't make sense to have to factor in $150 in annual expenses (now that returns aren't tax deductible). So I ask...are other investors out there paying an additional fee for your return each time you add a property? If so, how much are you being charged per property? Imagine someone who has 20 properties at this rate. That'd be $3,000 just for the rental units and nothing else!
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#1 Tax, SDIRAs & Cost Segregation Contributor
- Tax Accountant / Enrolled Agent
- Houston, TX
Tax preparation fees for REI business are still deductible.
And even if an expense was not deductible - it's a poor reason to avoid it. Tax-deductible does not make something free, it merely provides a discount.
Example: a $100 tool can give you a $30 tax break. So it essentially costs you $70 instead of $100. Do you buy it or not? The decision is not driven by the discount. It's really about - do you need this tool? If yes, then you will pay $70 and even $100 for it. $70 is better, of course.