When you invest in real estate, a properly qualified accountant should be a key member of your investment strategy team. The accountant’s primary task will be to keep track of the financial status of your investment, to minimize your financial risk, and to reduce the tax burden associated with your project. Their expertise covers all phases of your investment from its inception to completion. An accountant will be able to provide you with a range of services which typically include:
· Establishing a bookkeeping system (manual or computerised)
· Evaluating the soundness of budgets, financial forecasts, and investment plans
· Preparing and analysing the financial statements
· Establishing cash management and funds handling systems
· Providing expert advice on financial planning and tax management
· Filing corporate and/or individual tax returns
Accounting designations in Canada
In Canada, qualified professional accountants belong to any of these three categories: Chartered Accountants (CA); Certified General Accountants (CGA) and Certified Management Accountants (CMA). [Note: the “Certified Management Accountant” designation has replaced the “Registered Industrial
Accountant” designation formerly used in many provinces.] Each of these designations has its own professional organisation, known as: the Institute of Chartered Accountants, the Certified General Accountants’ Association, and the Society of Management Accountants.
Provincial statutes govern the use of these designations and the practice of the accountants who claim the titles. In addition, the professional organisation for each designation regulates the conduct, standards of practice, training and qualifications, continuing education, and code of discipline of their members.
The designations above immediately indicate differences in the nature of their training and professional practice, training, and educational qualifications. Some accountants go into broad public practice, others prefer employment in industry, the academe, or government, and there are those who become specialists in particular fields such as tax accounting, management accounting, finance, and so on.
For your own protection, deal only with an accountant who has the professional background and credentials that fit the demands of your real estate investments. Contact the professional governing body for the particular accounting designation if you need further information.
Finding a suitable accountant
As in most walks of life, probably the best recommendation for the services of an accountant is through the personal endorsement of a trusted friend or associate. It is likely that your banker, lawyer or real estate professional knows the right people who may be able to provide all the services you need for your real estate investment activities. Often these individuals will be aware of your particular requirements and be able to suggest a suitable accountant to work with, on the basis of their
past experience with that person and their knowledge of your needs.
Alternatively, you can look for an appropriate accountant by getting in touch with the institutes that regulate CGAs, CMAs or CAs in your province. You will need to know the type of accountant you need.
Finally, accountants are listed in local Yellow Pages under the headings “Chartered”; “Certified General”; “Management” or “Registered.”
Arrange a meeting with your prospective accountant to learn more about the person, fields of expertise, experience and other things you will want to know about his methods, staff, and so on. Prepare your questions beforehand to make sure you will cover every concern.
Try to get a feel of what it will be like to work with the accountant. It should be easy for you to establish open communication and good rapport with him or her to enhance the quality of the advice you will get and maximise its value to you.
Accountant’s fees and other costs
Accountants provide a wide range of services from bookkeeping, at the lower end of the scale, to tax advice and consultation, which is decidedly more complex. They also differ in experience, field of specialisation, types of services, and other factors that influence the level of service they can provide to you. All of these will have a bearing on their fees and other costs billed to you. It is important to know in advance the potential costs of their services to you.
Accountancy fees will range from $40 per hour to over $150 per hour. Rates are dependent on the degree of complexity for each billable activity provided to you. Be aware that your accountant may also charge for additional ancillary costs such as secretarial support staff or the services of a bookkeeper.