As BAM founder and CEO, Ivan Barratt, wrote about previously, there are benefits to switching from your old mom-and-pop CPA to an accounting firm. In today’s BAM Blog, we share three of the main reasons why you might want to make the switch…
If you’re like many investors, you probably have a diverse and complex portfolio which might include: a business, real estate, stocks/bonds/mutual funds, etc. By the time you reach the point of having a complex portfolio, it’s time to consider switching from a one-man/woman CPA who handles your accounting to an accounting firm. You’ll gain benefits like:
- Specialization: While a standard CPA has a solid foundation in a lot of things, the advantage of an accounting firm is that they have accountants there who focus on narrow aspects such as physicians’ portfolios, real estate, operating companies, and beyond. It’s similar to the difference between a GP and a specialist; if you need very specific care, you should probably see the professional who specializes in the area you need.
- Legal/Tax Info: Another advantage of having an accounting firm vs a one-person CPA is that you’ll also gain the benefit of more people who stay up-to-date on the ever-changing tax law. In fact, you’ll find that most accounting firms actually have a tax attorney on staff, should you need one.
- Higher Accuracy: Early on in your career and investing, a sole-proprietor CPA may be adequate for your needs. As you advance in your business/career and your investment portfolio grows in complexity, you need the benefit that a well-equipped team can provide. An accounting firm can, and often does, bring higher accuracy which can definitely pay off. As Ivan mentioned in his article, he has had investors who were given totally inaccurate information by one-person CPAs, only to have accounting firms correct what would have been costly mistakes. Ivan himself went from a $15,000 loss to a $15,000 gain by switching from a basic CPA to an accounting firm. Again, the benefit in having specialization and a larger team leads to higher accuracy.
Although you may pay more for the services of an accounting firm, it’s worth it to ensure the accuracy of the tax work with your investments. When any cost savings in choosing the one-person CPA could be lost by a costly mistake, it’s easy to see that spending more up front is worth it to work with a team that specializes in the type of accounting you need.
Want more info on multifamily investing? Go to investments.barrattassetmanagement.com and sign up for an account. Once there, under “offerings” you’ll find a free library with articles and videos featuring Ivan and his insider knowledge and insight, as well as a ton of great info on BAM, our team, and our offerings.