On the first day of my trip back to Atlanta, I spent much of the day driving around the city and suburbs interviewing CPAs. Let me start by saying I wasn’t at all impressed with the overall quality of the CPAs I spoke with.
The bottom of the barrel were the ones who obviously knew very little about anything tax related. For example, the first guy I spoke with, when asked, “What should I be aware of from a tax-perspective when buying my personal residence?” responded with, “The most important thing is to get the house checked for Radon.” While I appreciate the advice, it wasn’t what I would be paying him for.
Then there were those who had very little knowledge of real estate issues (despite what they had previously told me). One guy suggested that I register my investment company as a C Corporation, which is clearly a bad decision from a tax perspective (C Corporations are not a good entity for which to hold appreciating assets). Another guy, when asked, “What would it take for me to qualify as a Real Estate Professional?” responded with, “As long as you spend a lot of time doing it, you are a professional.” Somehow I don’t think the IRS is going to agree with that definition…
And then there were the CPAs who were just plain out of my league. A few had obviously been dealing with big-time RE investors for a long time, and didn’t have the patience (or the desire) to deal with someone just starting out and asking for basic help (like setting up the businesses). While I appreciate the fact that there isn’t always going to be a great fit, unfortunately the CPAs who were in this category didn’t do a spectacular job of making me feel like a potential client.
Heading into my final meeting, I was pretty discouraged. My only business goal for this trip was to find a CPA and it appeared I wasn’t going to do it. But, as luck would have it, the last guy I spoke with was fantastic. He was qualified to help me with all the basic aspects of defining the business, and referred me to a law firm that could actually register the businesses for me (in Atlanta, it is apparently illegal for CPAs to register businesses for clients). He was also able to answer all of my questions about short-term accounting and tax strategy, and made me feel comfortable about the fact that I didn’t fully understand the relationship and process that would ensue as we started to work together.
He suggested that I set of the businesses as LLCs, and that once that was done, we should meet again, and he would file the paperwork necessary to declare a taxable entity for the businesses (likely Sub-Chapter S Corporation). I have contacted the firm he suggested to get the LLCs set up, and then will be giving him a call once I get settled in Atlanta for a follow-up meeting.