What is an average price for Accountant as new investor?

Question

We are looking for a CPA and have 4 rentals - 2 active and 2 in the pipe and try to keep one flip running all the time (4 completed so far). We have a property management company and my wife is using Quickbooks online and does most of the work entering all the receipts and tracking the accounts. Sometimes we have tax and accounting questions and need our taxes done for the business. What should I expect for pricing? I know that is an open question but what is normal? One company says 400-700 a month and that seems very high. We paid around a thousand for all of last year but our accountant moved to another company and we do not get along with the others there so we want to move on. We are not cheap but like any other service we do not want to over pay. Thanks in advance.

Mike

Marina Draper · Answer

I would like to add my five cents as well - it's not all about the price. I think it's about what you get from your relationship with your accountant. If they simply do you tax return, it's one thing. But if they help you pay less taxes and avoid potential risks then accounting bill becomes an investment. If you pay $5,000 to your accountant who will save you $15,000 on taxes, it's a totally different picture, right?

Very often I meet real estate investors who chose to go with a $200 tax return filing accountant who costed them thousands and tens of thousands of dollars in mistakes like miscalculated depreciation, missed deductions, miscalculation of capital gains when selling the property and so on.

I understand you don't want accounting fees to eat all of your profits, but I simply encourage to factor what you're getting from your accountant, weigh it against the price and find the combination that works for you.

Mary M. · Answer

I pay about 350 for my personal return and 1200 for my S corp.  i can call email my CPA anytime and she is happy to respond.

Given i have been charged 7,500 for the same service - i am happy!

It depends a lot on where you are in the country and how “high end” the CPA is.

David Barnett · Answer

I have a similar amount of buy and hold properties and I paid $1,000 last year.  Probably somewhere in the $1,000-$1,500 range would be fair.  I also do all of my own bookkeeping, so the accountant really just compiles everything, makes sure the appropriate rules are followed, etc.

Karen Rittenhouse · Answer

@Mike Stahlman - Yup, it varies and it depends. Starting out, we used someone part time who was a "floater" and worked for a lot of companies. We paid her by the hour as what we needed varied from time to time. It was never a flat rate.

Now we pay a fortune to a full-time bookkeeper and another CPA. But, there's nothing more important than accurate numbers so be sure the person you use knows real estate and all our laws about tax and entity structure so you're able take advantage of all the tax benefits available to you.

Good luck!

Basit Siddiqi · Answer

@Mike StahlmanI agree that $400-$700 a month is a little bit on the highside. This would come out to $4,800 - $8,400 a year. Some accountants are moving to a monthly pricing model because $400-$700 sounds less scary than $4,800 - $8,400.

Ultimately, it is very difficult to say for certain how much your taxes should be without all the information.Are all the properties located within the state that you live in? You may potentially be required to file additional state returns if the properties are out of state.It also depends on the structure of the property management company that you have. This entity may require the filing of an entity return depending on its structure.Furthermore, it depends on how well your wife does the books. Doing the books for a rental business is done much differently than flips. I would agree that $1,000 - $2,000 in costs for the returns with some emails/questions throughout the year is a good starting point.

Mike Stahlman · Answer

@Marina Draper

Thank you. I in no way want to come off as trying to skimp or pay as little as possible.  Relationships are very important to our business.  Good team members are important.  And I understand the negative impact a bad or negative team member can have, be it a realtor, contractor, accountant, lawyer, etc.  I just have no way to measure skill or relationship compatibility without working with someone.  So I wanted to first set the criteria of about what an average price point should be to start.  Sounds like 1-2000 a year to start is a good target price range.   The rest will come but I don’t want to over pay either.

Thanks for the feedback

Mike Stahlman · Answer

Thank you that sounds good. It is about what we paid last year so just want to be sure we are shopping in the right store.  I really appreciate the input. Any recommendations for someone who is good to work with?  Thanks again.  @Lance Lvovsky maybe we can discuss if you can work with us.

What is an average price for Accountant as new investor?

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