Dumb question:Who am I looking for? Accountant or legal services?

[Mary Jay]

Hey guys,

Sorry for a dumb question.

I am not sure who am I looking for, an accountant or paralegal?

I need to make sure I am not doing anything that will pierce the corporate veil and put my LLC and other assets in jeopardy.

For instance, I need somebody who can tell me if I am doing funds co-mingling or not. Making sure my LLCs do things properly, And in general,  I need some guidance. 

Do I need and accountant? Or paralegal? Or attorney?

I do not want to pay an arm and a leg because I am starting out and do not have much money.

I am not even sure what to put into google search: looking for a cheap attorney? Looking for a paralegal bookkeeper?

I dont even know who am I looking for...

Please help!

[Keith Weigand]

@Mary Jay I'm not sure how accounting methods would ever break the 'veil' of an LLC. I have several LLCs and my cpa takes care of my annual accounting/taxes. He knows how to appropriate and file my returns. I've never heard him suggest that one way or another I would expose myself legally from under my LLC.

[Kenneth Garrett]

@Mary Jay

It’s a double edge sword unfortunately.  When it comes to bookeeping and saving taxes it’s generally your CPA.  When it comes to asset protection it is an attorney.  Is there crossover on both of these yes.  This is why building your team is so important.  You need the right people on your team. 

Check out Mark Kohler on you tube. He is a CPA and Attorney. He also hosts a weekly podcast with his partner Mat Sorenson called Refresh Your Wealth. The podcast is designed for real estate investors. I think you will get a lot of value by listening to quality podcast and other educational functions. Attend local REIA groups and meetups.

Good Luck.

[Simon W.]

Before you go out and just spend a massive amount of money for CPA and/or Attorney. Hire a competent consultant or accountant(non-cpa) to review your books to see what you are doing right/wrong. 

[Linda Weygant]

Originally posted by @Keith Weigand:

@Mary Jay I'm not sure how accounting methods would ever break the 'veil' of an LLC. I have several LLCs and my cpa takes care of my annual accounting/taxes. He knows how to appropriate and file my returns. I've never heard him suggest that one way or another I would expose myself legally from under my LLC.

Co-mingling funds is one of the quickest and easiest ways to break the veil. Essentially, if you consistently pay business expenses with personal assets or pay personal expenses with business assets, any half way decent attorney who is suing you will be able to say "your honor, the LLC and the individual behave as though they are a single entity. They do not operate separately and do not act separately because funds cross back and forth constantly and continually with no formal arrangement. Therefore, I ask that you declare the LLC as null for asset protection purposes and allow my client access to the personal assets."

[Keith Weigand]

@Linda Weygant Good point Linda. I had my investor hat on and not my property manager hat on when I was thinking it through. BTW, on a side note, people often pronounce my last name like your's is spelled and since my sister-in-law is Linda, I had to do a double take on this post. :) 

[Linda Weygant]

Originally posted by @Keith Weigand:

@Linda Weygant Good point Linda. I had my investor hat on and not my property manager hat on when I was thinking it through. BTW, on a side note, people often pronounce my last name like your's is spelled and since my sister-in-law is Linda, I had to do a double take on this post. :) 

I'm pretty sure we're related somewhere along the way.  I have lots of Weigand's on the family tree.  :-) 

[Costin I.]

@Mary Jay - it sounds like you need an accountant/CPA/bookkeeper.

One thing you need to do with your LLC not to pierce the corporate veil and protect your assets, is to treat it like another person/entity. If you were to deal with another entity, like a vendor, contractor, or business you wouldn't buy stuff for them, right? And they wouldn't pay for food for you, right? If they do a service for you, they would invoice you, you would pay, get a receipt and vice-versa. All in each own bank accounts, with separate accounting, etc. Money follows a specific flow in and out.

[Mary Jay]

Originally posted by @Kenneth Garrett:

@Mary Jay

It’s a double edge sword unfortunately.  When it comes to bookeeping and saving taxes it’s generally your CPA.  When it comes to asset protection it is an attorney.  Is there crossover on both of these yes.  This is why building your team is so important.  You need the right people on your team. 

Check out Mark Kohler on you tube. He is a CPA and Attorney. He also hosts a weekly podcast with his partner Mat Sorenson called Refresh Your Wealth. The podcast is designed for real estate investors. I think you will get a lot of value by listening to quality podcast and other educational functions. Attend local REIA groups and meetups.

Good Luck.

 Thank u so much for mark kohler!

I’ve listened to him today- so much good info!!!

[Mary Jay]

Originally posted by @Costin I.:

@Mary Jay - it sounds like you need an accountant/CPA/bookkeeper.

One thing you need to do with your LLC not to pierce the corporate veil and protect your assets, is to treat it like another person/entity. If you were to deal with another entity, like a vendor, contractor, or business you wouldn't buy stuff for them, right? And they wouldn't pay for food for you, right? If they do a service for you, they would invoice you, you would pay, get a receipt and vice-versa. All in each own bank accounts, with separate accounting, etc. Money follows a specific flow in and out.

 Very good point!

[Mary Jay]

Originally posted by @Simon W.:

Before you go out and just spend a massive amount of money for CPA and/or Attorney. Hire a competent consultant or accountant(non-cpa) to review your books to see what you are doing right/wrong. 

 I’ve thought about it. 

 I guess the question that I have is how would an accountant who is not attorney know if I’m doing something wrong? 

[Timmi Ryerson]

I have read this thread and find that you already have good ideas and answers. But as someone who has an LLC and had the occasion to have to defend it I want to say that the most important part of picking someone for advice is that you choose someone who specializes in your field. So you are a real estate investor, get an accountant (not a bookkeeper) who has experience in that area. They can help you choose your chart of accounts and allocate what money is considered capital and what is expense. It will make a big difference on your balance sheets and P and L etc. Good luck. Sounds like the person giving the podcast is a great resource for all of us as well.

[Costin I.]

@Mary Jay - "how would an accountant who is not attorney know if you are doing something wrong?" He will not know. More than that, if you'll ask an accountant legal questions he will likely referr you to an attorney and vice versa - very frustrating when they drop the dead cat from one to the other and back and forth, but that will happen a lot more than one would hope. Is your job to take care of your babies. Even finding that one professional that can answer from both perspectives is very rare/hard and closer to an unicorn. You might find that kind of service with a bigger firm for which you'll pay accordingly ($$$$+ annually).

You need to learn yourself or pony up the money - here are some books to get you started on this:

• for accounting and taxes - Every Landlord's Tax Deduction Guide 15th Edition (and you can supplement that with Deduct It!: Lower Your Small Business Taxes and Tax Savvy for Small Business: A Complete Tax Strategy Guide Twentieth Edition
• legal and insurance - Every Landlord's Property Protection Guide: 10 Ways to Cut Your Risk Now (book w/ CD-Rom) and supplement with Every Landlord's Legal Guide (generally speaking Nolo has a good collection of books)
• property management - an excellent resource is The Book on Managing Rental Properties: A Proven System for Finding, Screening, and Managing Tenants With Fewer Headaches and Maximum Profit
• entity start and maintenace - Garrett Sutton's Start Your Own Corporation: Why the Rich Own Their Own Companies and Everyone Else Works for Them (Rich Dad Advisors)  and Run Your Own Corporation: How to Legally Operate and Properly Maintain Your Company Into the Future

And here is a set of questions to help you judge if you maintain your corporate well:

How well have you separated yourself from your business?

Does your business have a separate bank account?

If you’re working out of a home office, is that office reserved strictly for business?

Does your business have a separate phone line?

Are you signing all documents, contracts and agreements with your corporate title?

Does your corporation or LLC have Articles of Incorporation or Organization filed with the Secretary of State's office?

Does your LLC have a written operating agreement?

Are you filing your list of officers or managers annually with the Secretary of State’s office?

Are your municipal and state business licenses up to date?

Has the issued stock of your corporation been filed in your stock ledger?

Do you have a federal tax ID number?

Are you making quarterly payroll tax deposits?

Are all bank loans to the corporation documented?

Are any personal loans to the corporation documented?

Are annual meetings being held by shareholders?

Are annual meetings being held by the Board of Directors?

Are annual meetings of the managers and/or members being held by your LLC?

Are all corporate resolutions documented in writing and filed in the corporate book?

Does your corporation or LLC have its own annual tax return?

Is your corporate entity adequately capitalized?

[Simon W.]

The best the accountant can do for you is to make sure you are not co-mingling funds and also to follow the GAAP standards. 

For example, I know enough accounting (my whole career in real estate) that what can be done and what shouldn't be done. For more detailed legal stuff, you have to talk to an attorney. 

[Mary Jay]

Thank you so much!