Results of Meeting with CPA

I think I may have found a winner here. After formal introductions and a brief chit-chat, I began to tell the CPA what it is my wife and I have done to date (bought and rented out one SFR), what we plan to do (both buy-n-sell and buy-n-hold more properties), and why we are seeking out the services of a CPA. I didn't really ask any of my questions yet, because I wanted to guage her reaction to my situation first. My first inclination that she was focused on my situation was when she got her notepad out and started writing notes as I was talking.

She went on to tell her background, how she conducts business, and the normal formalities of her business. Then she started expanding on this by saying she has five clients who are real estate investors. She says she doesn't do REI herself, but does own a rental property. She mentioned that her REI clients run the gambit: a few are like me and only have one SFR rental, one is involved strictly with commercial properties, and one is a 'professional' REI with 25+ properties. She says when she started out as a CPA, she knew only the basics of accounting and tax laws as they pertain to REI. However, she said when she picked up the 'professional' REI years ago, her knowledge in the area has risen exponentially. I figured if a 'professional' REI with 25+ properties is using her as a CPA, this must definately be another good sign.

I then asked her if I could ask some questions, and then pulled out my list. As I started to scan the list, I noticed almost all of my questions were already answered. While she was talking, she said she handles entity creations and only adds $50 to what the state charges, but includes a manual containing all the information about the entity. I thought this was a reasonable price. She also mentioned she has helped clients with 1031 exchanges, and helped the 'professional' REI set up multiple entities for his venture to streamline his processes and to take advantage of tax implications. I had mentioned to her that Texas imposes some sort of tax on LLC's after some monetary amount, and if she knew about this. She said I was correct - Texas imposes a franchise tax on proceeds above $150,000. However, she mentioned in the same breath that the legislature is now trying to pass a bill that would impose the franchise tax on ANY proceeds of an LLC. I thought this was a positive response for two reasons: (1) she knew exactly what the tax was called and the amount, and (2) she is keeping up-to-date on new legislation. For those of you in Texas (or even outside the state), you may well know the fiasco the legislature is going through in regards to school finance. The CPA said that instead of conentrating these special sessions on school finance (which is why they are having the special sessions to begin with), the legislatures are using the time to adopt and pass bills such as this.

We talked for another 20-30 minutes about different things related to my situation, her services, REI, and whatnot. I asked her if it turns out an LLC is the way to go for us (which she mentioned several times that it was), were there rules regarding meetings and minutes and such. She said in Texas, a 1-2 member LLC does not have to hold formal documented meetings with minutes, however, it's good to do when a big decision is made and/or when the members are not related by blood. She did say I would need an operating statement/agreement(?), but that's something she'll work with me on as part of her $50 fee.

There was a slew of other things we talked about, like her fees, which sounded reasonable, and the different methods of accounting/tax services she offers, like she does everything and sends us periodic reports, or she does everything and sends us periodic reports AND we can view our info on the web, or we do the quickbooks and send her updates only, or she comes to our home and sets everything up for us to do alone. She says some of her clients opt for her to do everything, so they can concentrate on their business, while others to the exact opposite - it's really whatever the client wants. She says her 'profesional' REI client started out with her doing everything, but once he started to understand more and more about accounting and tax rules and processes, he now does a majority of stuff himself. I told her we'd probably do that too. After about an hour, I was satisfied with what we've talked about, thanked her and told her I would talk it over with my wife and get back with her, and left.

I really have a good feeling that she understands our position and can be of great service. Not only did she sound competant in the area of REI accounting/tax, she also had a personality of someone I felt I could deal with easily on a professoinal basis. My wife and I talked briefly about my meeting when I got home, but will talk more about it over the weekend (when we both have time to sit down and talk for an extended period). I told the CPA I'd get back with her on Monday at the latest on a decision, but it sounded like a good match. Hopefully this will be the one and work out as expected.