Mastering Money: Ask These 4 Questions Before Hiring a CPA

By Katherine Mechling

As independent contractors, REALTORS®’ taxes are rarely straightforward. Hiring a qualified professional to help is a great idea … so long as that person understands this industry, your business, and how to help you grow. If you hire an accountant who can’t keep you compliant, especially with your quarterly taxes, and can’t help you design your business to be more tax efficient, you could be losing thousands without even realizing it.

How do you know if a CPA might be the right fit? We asked Alan Rohrer, CPA, whose firm The Accent CPA Group works specifically with real estate agents and brokers, and he shared the four questions you should be sure to ask to make sure you’re hiring the right person for the job.

1. What kind of industries do you specialize in?

   Rohrer: This question gets at the thing I think is the most important: that your CPA has experience working with people who are essentially self-employed. I wouldn’t call it a red flag if someone specializes in 20 different industries, but you might not get the type of deep expertise that you could get from someone who specializes in only one or two. Ideally, when you ask what type of industry they specialize in, they’ll say high-earning 1099 contractors.

    

2. What’s your fee structure for compliance and for questions throughout the year?

   Rohrer: You should always ask about fees, but the key here is to look beyond just the cost you’ll have to pay for getting your taxes prepared. Will they help you stay compliant with quarterly taxes throughout the year? And if you’re looking for advice, like say you’re going to buy a rental property and want to know how that will influence your tax situation, do they charge a fee every time you have a question?

   This question helps prepare you for what the relationship with this CPA will look like. For instance, if you know you do a lot of transactions where you’ll have tax questions throughout the year, make sure you’re comfortable getting billed for each question.

    

3. Will you be available to help if I get audited?

   Rohrer: Most CPAs will be able to help you out if you wind up getting audited. But you should definitely confirm this beforehand — that’s not something you want to leave up to chance. It’s important to make sure the person who prepared your tax return will be able to assist you if there’s any questions about it.

    

4. Do you offer tax planning, and what does that look like?

Rohrer: I recommend working with someone who specifically offers tax planning. If a prospective CPA just says, “Oh, yeah, we give people recommendations on how to save money on taxes as part of tax preparation,” in my experience, that’s usually not going to be enough. When tax preparation is more generically included, it usually takes the form of one-off comments. If someone actually offers tax planning as a separate service, they’ll look into your specific situation and figure out how you can design your business to be as tax-efficient as possible.

For most CPAs, tax planning as a separate service will probably cost more than tax preparation. But with a good tax plan, you could see three times more return on investment in just that first year. Whatever you spend on tax planning, you should expect to make it back in tax savings. So even though tax planning costs more, you’ll get a lot more value from a CPA who offers it in addition to just preparing your taxes at the end of the year.

Katherine Mechling is senior editor of California Real Estate magazine.

More from the February 2020 Issue:

Pro Tip: Tami Bonnell on Working with the Hyper-Informed Consumer

Success Story: How I Brought in $10M in my First Year as a REALTOR®

Marketing You: For Better Branding, Find Your Purpose

Getting Clients: 3 Tips for Top-Notch Referrals

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