4 Ways CPAs Can Save You Thousands of Dollars in Real Estate Investing

The  Austin CPA firms have a single primary goal in mind when they work with you — save your money. CPA can facilitate you in your business dealings in various ways, and that’s especially true when it comes to real estate investing. Here are 4 ways CPA’s assistance can save you thousands of dollars.

1.    Improve Your Negotiation Skills

When you’ve hired an expert, it’s easy for you to meet clients and close deals successfully. They ensure that you get better terms and a better price for your property deal. You can save money because your CPA will ensure that you don’t overlook any critical points in the agreement and they’ll also help you identify loopholes and pitfalls of the real estate investment. 

2.    Get Discounts

CPA can save you tons of money by filing your taxes on time and taking advantage of it in terms of incentives, discounts, and tax breaks offered by the federal and state government. A CPA can facilitate you in finding tax breaks for which you qualify. They can then explain to you the process of counting every discount that you can get — ultimately saving you thousands of dollars in the long run. 

3.    Investing Strategies

A CPA, who’s aware of the ins and outs of the real estate market, is a fantastic asset for you. They can assist you in finding the properties which offer the greatest return on investment. They can also help you navigate through the confusing red tape, legal work, and paperwork involved with selling and buying property. 

Suppose you have a real estate business, and you sell and buy property regularly. In that case, you must have an experienced CPA by your side to ensure that you aren’t making any blunder and are following through with the tax obligations.

4.    Organization

When it comes to maintaining accounts and taxes, it’s vital to stay organized. Hiring a CPA will help you with that. When you know that you have to give your financial records to someone else, it’ll give you the urgency and responsibility to have them ready on time.

If you’ve hired a good CPA, they’ll set guidelines for your team to follow to keep accounting and tax files accessible and organized.

Get Expert CPAs in Austin, TX

To fully leverage the tax benefits of real estate investment, it’s best to consult a specialist tax accountant. For a CPA firm specializing in real estate, get in touch with us, at Harmon/Harmon. We operate in Austin, TX, and we offer accounting services for real estate  and tax planning and compliance services for real estate agents and brokers.

How to Find the Right CPA For Your Small Business?

Look at you running a successful business out of your house! You're serving customers day in and day out, and in exchange, you're getting what every small business needs to flourish: money. Your business has started to grow so fast that you need to hire someone to keep track of your money. It's time for you to find a CPA (Certified Public Accountant).

But how can you find the right CPA for your business? We'll guide you!

Look Online, But Verify Their Credentials

Online search is the best place to begin looking. Since Google search shows your results based on your zip code, you'll get a long list of CPAs in your area. If you reside in a small town, you may have to tweak the search radius to get CPAs near you. 

During your search, make sure that the CPA is actually certified. A certified CPA is one who's passed the test and is given a license by the state. Moreover, CPAs should also fulfil the requirement of continuing education so that they're abreast with local, federal, and state tax laws. If you need them to prepare your business's taxes, ensure that they've got a PTIN (Preparer Tax Identification Number).

Connect with a Reliable Professional

If you want to excel at something, look for a successful person in the field and emulate what they do. You can use this principle to anything. Want a good body? Get in touch with a person who's got a good body and learn from them.

Similarly, in your case, you can look for successful small businesses and connect with entrepreneurs. LinkedIn is a great place to start. Send them a follow request and drop them a message to start a conversation. What you'll learn this way is firsthand experience, and that's priceless.

Ask those entrepreneurs about how they went about finding a CPA and what financial advice do they have for you. There's a possibility that they might link you to their CPA and make your search easy. Always network!

Have an In-Person Meeting

A CPA will handle your money. Therefore, it's vital that you meet them in person. As you've put a lot of time and effort into establishing your business, you need a CPA whom you can trust. And the feeling of trust and reliability will only come with an in-person meeting. If the candidate is flaky about the meeting, cut them out from the list and look for someone else.

The meeting is all about gut feeling. Follow it.

Get Certified Public Accountants in Austin, TX

If you are a small business struggling with tax compliance and other accounting issues, get in touch with us, at Harmon/Harmon. We’re one of the CPA firms specializing in real estate operating in Austin, TX, that works with small businesses to assist them with tax planning and compliance. Get in touch to get your small business off the ground.

Steps To Real Estate Investment Success

Tax Compliance Mistakes Real Estate Investors Can’t Afford to Make

On paper, real estate investments sound perfect: they’re passive revenue streams that underwrite your interests. However, many income sources sound great on paper. In actuality, it takes skill, knowledge, and experience to successfully generate income from these sources, and real estate investment is no different.

For instance, there are some tax compliance mistakes that you need to avoid at all costs:

Overpaying

Overpaying is an alarmingly prevalent tax-related issue in the real estate market. Generally speaking, if you provide inaccurate information, it’s highly possible that you’ll be overpaying. For instance, suppose you overstated your property value on your property tax return. You may have done this because your financial records weren’t correctly handled, or you failed to recognize some exemption. Alternatively, you could have also included ghost assets while reporting the assets you still use. These are assets that are no longer in your possession.

Inaccurate information means you’ll be taxed for more property than you have. The result is that you end up overpaying the IRS. You should periodically analyze your financial statements and subject your property to valuation by a skilled accountant to make sure you aren’t making unnecessary payments.

Improper Categorization and Management

All property isn’t alike, nor is it subject to the same tax laws. For instance, personal property typically isn’t taxed, and even if it is, you still need to maintain proper categorization.

Proper categorization is crucial to presenting accurate information to your jurisdiction. If you submit inaccurate information, you may be slapped with a fine or, in extreme cases, charged with intent to defraud.

Don’t Miss Deadlines

As a real estate investor, missing your tax deadline will needlessly cut into your income. These deadlines are fixed, so there aren’t any second chances.

Not Seeking Expert Advice

No one can be a specialist in everything. Unless you’re a successful real estate investor with intricate knowledge of tax planning and compliance (and if you are, color us impressed), you should seek expert advice.

Get in touch with us, at Harmon/Harmon, to make sure you don’t need to worry about tax compliance. We’re a CPA firms specializing in real estate in Austin, TX, that offers tax planning and compliance services for real estate agents and investors. We’ll make sure your taxes are filed correctly and nothing unnecessarily digs into your income.

The Financial Entanglements of Divorce

No matter how stoic you are, divorce proceedings are difficult. The emotional tumult can disrupt many other aspects of our lives, such as work. The mental stress can cultivate bad habits. And the financial implications can ruin a person’s life.

For instance, a case taken to its legal conclusion, can cost a person almost $15,000. However, divorce is typically even more expensive since this figure doesn’t reflect the effects of post-divorce financial arrangements. While consulting a divorce attorney is crucial, you should also consult a CPA to untangle the confusion surrounding finances and divorces. Here are some of those entanglements.

Property

There is not a set method of dividing property after a divorce. The separated parties can reach a compromise or agreement on how to separate property, or the state can issue a court order detailing the arrangement. In some states, community property laws prevail. These laws state that regardless of who acquired an asset during a marriage, the asset is considered a joint marital asset. These assets are divided equally between both parties. Other methods for dividing property include bartering and distributing the proceeds from the sale of property.

Debt

Figuring out how to distribute debt is one of the more vexing financial entanglements of divorce. The first thing to do is request your credit report and check your individual and joint accounts and debts.

Moreover, to prevent the debt from growing, make sure you cancel any joint credit cards you have. With this done, you can figure out how to resolve the debts. Ideally, you should pay off all your debts immediately.

If that is not possible, you can reach an arrangement on how to divide the debt up, such as exchanging debt for more property.

Taxes

Despite not being an immediate concern, the tax implications of divorce can turn costly if ignored. For instance, some of the questions you will need to answer include:

·                 Who can claim a dependent on their tax returns?

·                 Who can claim the Head-of-Household status?

·                 How will you avoid child support being non-deductible?

A CPA (certified public accountant) can help you handle these issues, since tax law is complicated, changing, and interdependent with other laws. If you need a CPA firm that can assist you with divorce financial planning and tax planning and compliance, get in touch with us, at Harmon/Harmon. We offer  divorce financial advisor Austin TX and forensic accountants in Austin, TX, and we’ll help ease the financial difficulties of divorce for you.

Real Estate Investment and Tax Benefits: A CPA’s Perspective

Real estate investment is a great way to develop a passive income source. While you work your 9-5 job, you’re also guaranteed revenue and capital gains through rental income and property appreciation, respectively.

If you’re particularly successful, you can even drop the job and focus on something else you enjoy while having a reliable income stream from your real estate investment. However, real estate investment offers more than just an income stream; it also comes with an assortment of tax benefits. Here are some of them.

Depreciation

Depreciation refers to the reduction in an asset’s value due to wear-and-tear, obsolescence, etc. The IRS provides guidelines for how to depreciate your asset, but that’s not where the tax benefit rests. Depreciation is a paper loss. For instance, if your house’s value decreases, you don’t pay anyone, but the provision for depreciation is still treated as an expense. Consequently, depreciation reduces your taxable income without you actually paying anything. However, this reduction may be offset by a capital loss in your asset’s value.

FICA

FICA refers to the Federal Insurance Contribution Act. This is a U.S. law that enforces a tax on employees and employers to fund Medicare and Social Security programs. This amount is taken directly from a person’s pay, and one can’t opt out of paying the tax. However, there are some kinds of incomes, such as rental income, that aren’t subject to FICA.

Refinancing

Refinancing refers to the process of replacing a current credit arrangement with another credit arrangement under different terms and conditions. Refinancing has an assortment of advantages, such as lower interest rates, reducing monthly repayments, and freeing up cash. The last advantage is particularly relevant to refinancing a real estate investment.

If your real estate has accrued significant equity, you can pull out that equity by cash-out refinancing your property. Cash-out refinancing involves extracting the appreciated value of your property by establishing a higher loan amount, which is non-taxable. While this does increase your debt, you also get more cash, which you can use to improve your property or invest elsewhere.

To fully leverage the tax benefits of real estate investment, it’s best to consult a specialist tax accountant. For a CPA firm specializing in real estate, get in touch with us, at Harmon/Harmon. We operate in Austin, TX, and we offer accounting services for real estate  and tax planning and compliance services for real estate agents and brokers.

Financial Problems SMB Owners Need to Address

As an SMB, you also have to deal with competition from other businesses trying to acquire your market share. But alongside, you also need to have a tight rein on your finances. Here are some financial issues you need to address and be aware of at all times.

Tax Compliance

Almost 85% of small businesses overpay income taxes every year. While that’s alarming, if you’ve ever had the displeasure of parsing through tax law, it’s not surprising. Tax law is beyond complicated, and it’s also frequently changing. Moreover, tax law is also impacted by other laws, such as labor laws.

This makes keeping up-to-date nigh impossible. Fortunately, there are solutions available to handle this burden. You can outsource handling taxes to accountants who can assist with tax compliance and planning.

Cash Flow

The inability to generate sufficient cash flow is the cause of approximately 82% of small business failures. Almost all firms compete by cutting costs and underselling. However, cutting costs requires reinvesting in a business, which requires generating sufficient positive cash flows.

Even if you’re not reinvesting, positive cash flows are critical supports for your operations. Ensuring that your finances are handled by skilled accountants can help reveal how you can cut costs and enhance revenues.

Raising Capital

Related to the issue of cash flows is having sufficient capital to grow. Having sufficiently large cash reserves is crucial to keeping a business afloat, but they’re not the only variable in the equation. Loans are another source of capital, while maintaining your consumer base is vital to making profits. You can make this process easier by keeping your finances organized and developing a plan. This will give you a list of options, as well as their risks and benefits, for raising capital.

If you are a small business struggling with tax compliance and other accounting issues, get in touch with us, at Harmon/Harmon. We’re one of the CPA firms specializing in real estate operating in Austin, TX, that works with small businesses to assist them with tax planning and compliance. Get in touch to get your small business off the ground.