Market capitalization in the United States has increased up to 236% in the last ten years. This is a lot of turnover all in one place, and there are a lot of financial complexities and regulations in place to maintain such a market.
All successful businesses need professionals that can help them with their financial and legal requirements.
Given the fact that taxes are headaches in real estate, and mistakes in filing them can have repercussions for agents and brokers, the role of CPAs have become more prominent recently.
Who is a CPA?
A Certified Public Accountant, or CPA, is an accountant who is qualified to provide financial consultancy for businesses. In the US, most CPAs are members of American Institute of Public Accountants.
Some states don’t allow anyone who is not a CPA to call themselves accountants.
According to American Institute of Public Accountants, CPAs can offer the following services:
- Assurance and attestation services
- Corporate finance (merger and acquisition, initial public offerings, share and debt issuings)
- Corporate governance
- Estate planning
- Financial accounting
- Governmental accounting
- Financial analysis
- Financial planning
- Forensic accounting (preventing, detecting, and investigating financial frauds)
- Income tax
- Information technology, especially as applied to accounting and auditing
- Management consulting and performance management
- Tax preparation and planning
- Venture capital
- Financial reporting
- Regulatory compliance
What Can They Do for a Real Estate Agent?
The job description of a CPA in real estate is pretty much the same for most other businesses.
They are employed by real estate companies and professionals to take care of financial records.
A public accountant is in charge of filing other monetary reports such as tax records and inventories.
Estimating tax liabilities and deductibles are key duties of these economic experts.
According to the US Bureau of Labor Statistics or BLS, CPAs in real estate earn a median of up to $70,000 per year. This is set to grow 6 percent in the next decade.
Why a Real Estate Agent Needs a CPA?
Real estate agents and brokers need a CPA for many reasons.
The first reason is financial wisdom. Real estate professionals are usually very busy and deal with huge amounts of money in their business. That is why they need somebody to moderate their transactions and make sure every penny flows smoothly.
Secondly and most importantly from my perspective, is tax liabilities. Agents can lose a lot of money, and some their entire business, due to tax fraud and misfiling. A CPA can clarify what is deductible and what is a liability.
Last but not the least, accountants will run some budget related tasks for your real estate company. These are:
- revenue and expenditure cycle reports
- lease abstracts
- cash basis income statements
- investment analysis and planning
Bottom Line
CPAs may sound expensive or irrelevant to some folks who have been taking care of their finances themselves for years. But, fast changes in the market and regulations on the state and federal level make CPAs a priority.
If you need to know more about tax and legal hurdles, don’t forget to check the following:
Legal Issues for Real Estate Agents
Tax deductibles for Real Estate Agents
The bottom line is that real estate agents need to focus mainly on their lead generation and marketing. It is not one of those jobs where you can basically walk and chew gum at the same time.
If you want to read more on ways to generate more leads, you shouldn’t miss this article : Lead Cultivation Guide For Real Estate Agents
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