My small Real Estate business earns about $200k a year and I have 3 rentals. How can I save on this cost? I am in NM. I currently pay myself $4k a month. I have a LLC. My only dependent is my spouse, I have no children and am a homeowner.
Am I paying too much for tax preparation. I pay $7900 a year
byu/whoisyoursaviour intax
Posted by whoisyoursaviour
20 Comments
By shopping around for CPAs maybe?
It doesn’t sound all that complicated. That service is available in the $1,000 range.
Yes you are paying too much. Your taxes don’t sound that complex.
I’m not a business owner so can’t say for sure, but I’ve never heard of a SBO paying that much.
Your CPA is ripping you off. My business is more than four times the size of yours, I have eight LLCs to do taxes on, and I pay about $2,500 for tax prep.
Now keep in mind, I hand my CPA the p&l and the balance sheet with maybe a page or two of questions.
If you are handing them Bank statements, and expecting a tax return back, maybe they’re just trying to tell you you need to find another accounting system.
I am inferring that you requested that your LLC be taxed as an S-corp or C-corp or a partnership. Those complicate things.
Now is the perfect time of year to put your work out for bid. I’d reach out to three other firms in your area and alert your current preparer that you are putting you work out for bid and invite them to bid as well.
Note that you will most likely have to sign a three-year agreement with someone to make it worth their while.
Just understand that at some point it isn’t worth someone doing the work. It’s possible that your current provider has enough higher dollar work that it isn’t worth dealing with you for anything else that $7,900. If that’s true and someone else will do just as good a job, but cheaper, then it’s best to part company.
I’d say tax professional probably want to be billing at around $200/hr. At $7,900 I’d be expecting 40 hours’ worth of work or one week. Do you compile all the information together? Or, do you just give them all the transactions and let them sort it out? If it is the latter than $7,900 might not be that far off the mark.
Is this preparer also your bookkeeper? Doing payroll? What’s your engagement with this person?
I own 2 businesses. 1 has two locations. He does that and my personal taxes for 3k.
If this is just tax prep and not additional services it is pretty high.
Seems high. Look into cpa’s and ea’s on Yelp, etc., for ratings and interview the top 3 or so.
My company generates around 400k a year and I pay around $1500
That’s insanely overpriced. Your CPA is giving you the “I don’t wanna do it but if he pays me this much I will” price.
That’s not a complicated setup unless there’s something you aren’t telling us. Just take a little bit of time to learn and do it through TurboTax for like $150.
Any bookkeeping, meetings throughout the year, etc.?
wow that’s a small business? How do you earn $200k across 3 rentals? I need to change my strategy.
Just shop for a CPA tax preparer!
Is there a reason you aren’t doing your own taxes? I’d get the returns from
prior years and look at the forms that were submitted. Follow the recipe. May also require some research on the IRS website to see what new rules have been put in place. You would save yourself a lot of money.
It’s hard to say, $7900 is high but what services are they providing on the rentals & your LLC. Did they do a Cost Segregation Study & implement this with filing form with the IRS. Do they provide payroll services & bookkeeping? Are the rentals in different states. I’m not saying one way or another. The more work they are providing for you to take full advantage of the US Tax Code the higher the cost
If literally all they do is prepare your return(s), you’re paying way too much. If they also have to do some bookkeeping/accounting, then what you’re paying them might be reasonable.
$200k revenue with 3 rentals? You’re probably leaving money on the table if you haven’t done cost segregation on those properties yet. I see this all the time – property owners paying full freight on taxes when they could accelerate depreciation and cut their bill significantly. Modern CFO Cost Segregation specializes in this exact scenario for real estate investors. The savings usually pay for the tax prep fees multiple times over, especially if those rentals are commercial or mixed-use properties. Just ran numbers for a client last week with similar portfolio size and we found about $45k in accelerated deductions they were missing.