Anybody have any experience with Attorney-CPAs?

[omega13]

Hi all,

Does anybody here have any experience with Attorney-CPAs? And by that I mean professionals that are legally able to exercise both qualifications.

I am considering working with one with regards to business entities eg. LLCs. According to them, the process of creating such entities, setting them up in tax favorable ways as well as having the same firm/attorney-cpa do the taxes for you is much simpler and cheaper than hiring different individuals for different tasks.

This seems advantageous as you would only be dealing with one firm/individual, would save money, and the business would be pulled more efficiently in one direction.

Also, the experience I have had so far talking to different attorneys, CPAs, tax preparers etc. is that they seem to differ wildly on what a tax efficient business setup looks like.

These are the issues that come to mind and would appreciate your feedback with:

1. The Attorney-CPA has an inactive CPA license. I can't find much info on that. Is it due to misconduct? Or are they cheap and don't want to pay the renewal fees?
2. I cannot find very many reviews on them. Makes it difficult to vet them.
3. They are based out of the state I live in. Should I need a face to face consultation, it would be much more difficult to get a hold of them. Is that a deal breaker?

What do you guys and gals think? How do you handle your business entity formations? How did you go about finding the team to help you in this journey of building wealth and FIRE?

Thank you,
O.

[Proud Foot]

I have no experience with an Attorney-CPA or how they run their businesses, the only ones I hear of are the ones with the radio commercials to help you fight the IRS and help settle your tax debt. 

[cpa cat]

1. The Attorney-CPA has an inactive CPA license. I can't find much info on that. Is it due to misconduct? Or are they cheap and don't want to pay the renewal fees?
2. I cannot find very many reviews on them. Makes it difficult to vet them.
3. They are based out of the state I live in. Should I need a face to face consultation, it would be much more difficult to get a hold of them. Is that a deal breaker?

What do you guys and gals think? How do you handle your business entity formations? How did you go about finding the team to help you in this journey of building wealth and FIRE?

1. Probably cheap and don't have time or inclination to complete the minimum continuing education requirements. The problem here is that we don't know if they're actually up to date on tax code changes and tax strategies - but they probably feel it's sufficiently covered by their attorney-related continuing education.

BUT - you can usually check with the State CPA Board to find out if they had any complaints against them. My state board actually allows you to do this online via their website.

2. Always is difficult. It's hard to tell if an attorney or CPA is a nitwit until you work with them. Sometimes CPAs with great reviews turn out to just be likable nitwits.

3. I have lots of remote clients. You can Skype, email, telephone. Not a big deal EXCEPT that there's always a risk with my out of state clients that I won't know the particulars of their state entity formation. For example, this one wasn't my oversight, but I was recently surprised to find out that a client in TN formed an LLC and it turned out that it turned his tax-free sole proprietorship into an entity that is subject to TN's totally insane taxation system. Ever since then, I've been careful about advising clients about entity formation in other states - I make sure to research it carefully - but it can be easy to overlook something when it's not your state of expertise.

4. The actual formation of the entity tends to be super easy. The forms are really simple. Getting an EIN from the IRS is free and takes 2 minutes. The next step of making entity elections with the IRS is the part where a lot of people get tripped up. Next - I tell people that with corporate minutes and bylaws they might want an attorney or, if they feel comfortable they can find templates online. In rare instances, I offer further assistance with corporate minutes because there are tax matters I'd like to see in the minutes that no lawyer ever puts in there. But entity formation and documentation is a whole dodgy area where there's debate over whether it constitutes the practice of law, which CPA's can't do unless they are also attorneys.

I do not believe that you'll get better tax advice from an Attorney-Lapsed-CPA on tax efficient entities than from a CPA-non-Attorney. But you might get better legal advice. All of the Attorney-Active-CPA's that I know are active tax attorneys (ie: they will take your case to tax court), or tax debt-resolution specialists.

[SeattleCPA]

I am considering working with one with regards to business entities eg. LLCs. According to them, the process of creating such entities, setting them up in tax favorable ways as well as having the same firm/attorney-cpa do the taxes for you is much simpler and cheaper than hiring different individuals for different tasks.

It is really easy to form an LLC. Here's quick blog post I did about steps you take in Washington state. Mostly, you fill in blanks that ask for bits of info like your name... and your address.. Other states work the same way.

http://evergreensmallbusiness.com/forming-a-washington-state-llc/

BTW with an LLC, you can also choose the type of tax return you file: sole proprietorship, partnership, C corp, S corp... And that's where you might want to get some help.

Either a CPA who does corporate tax or a tax attorney can help you with. But probably a tax attorney is overkill. Good tax attorney's cost $500 an hour and you can't go to them and expect them to only spend an hour.

[mousebandit]

I would lean towards CPA for entities that I'm most concerned about taxes on, and get an additional attorney review for entities that deal more with asset protection.  However, I would not give extra credit to an individual with both qualifications, especially when one is lapsed.  I would actually avoid that individual.  I want someone who is focused on their speciality, and at the top of their game.

[CareCPA]

It takes enough time and effort to stay on top of the taxation side of things. I can't imagine having to stay on top of the law side as well. I would be incredibly impressed if an individual was great at both.
Plus, like SeattleCPA said, if they are great at both I would expect to pay a large premium.

[SeattleCPA]

I would lean towards CPA for entities that I'm most concerned about taxes on, and get an additional attorney review for entities that deal more with asset protection.  However, I would not give extra credit to an individual with both qualifications, especially when one is lapsed.  I would actually avoid that individual.  I want someone who is focused on their speciality, and at the top of their game.

Agreed.

The double-credentialed practitioners I know and have worked with are usually either *really* one or the other. E.g., an attorney who practices law but who also happens to be a CPA... or a CPA who is really an accountant (maybe a tax accountant) but who also happens to be an attorney.

[SeattleCPA]

It takes enough time and effort to stay on top of the taxation side of things. I can't imagine having to stay on top of the law side as well. I would be incredibly impressed if an individual was great at both.
Plus, like SeattleCPA said, if they are great at both I would expect to pay a large premium.

Also agree with this.

Tax attorneys, in my experience, are the people who deal with big dollar issues in big transactions. Top of the food chain stuff. They cost in Seattle maybe $500 an hour. And you don't "buy an hour". You buy days. And you get outstanding expertise and rich experience. But they're overkill for situations most regular folk face.

BTW, the other time you work with a tax attorney is if you go to court about taxes. There are some CPAs who can practice before the tax court I guess... but I think you're want a heavy hitter in your corner if you're litigating with the IRS.

[omega13]

4. The actual formation of the entity tends to be super easy. The forms are really simple. Getting an EIN from the IRS is free and takes 2 minutes. The next step of making entity elections with the IRS is the part where a lot of people get tripped up. Next - I tell people that with corporate minutes and bylaws they might want an attorney or, if they feel comfortable they can find templates online. In rare instances, I offer further assistance with corporate minutes because there are tax matters I'd like to see in the minutes that no lawyer ever puts in there. But entity formation and documentation is a whole dodgy area where there's debate over whether it constitutes the practice of law, which CPA's can't do unless they are also attorneys.

I do not believe that you'll get better tax advice from an Attorney-Lapsed-CPA on tax efficient entities than from a CPA-non-Attorney. But you might get better legal advice. All of the Attorney-Active-CPA's that I know are active tax attorneys (ie: they will take your case to tax court), or tax debt-resolution specialists.

Thank you Cpa Cat for taking the time to write a long answer! I considered doing the formation myself. However, while I am somewhat comfortable with filing the paperwork online, I have questions about:

1. How to best prepare minutes.
2. Need help with a good operating agreement. One of the entities may be used for purchasing a rental so I want to make sure that I have good liability coverage in the language used.
3. I don't have an office location and would like to avoid using my home address in the application. Even the state's website actually recommends not using your home address. I need to go through them to ensure somewhat of a privacy stance and protection from frivolous suits. Any tips on this one? Asset protection seems to be another whole ball of wax with many dodgy characters.

This attorney-cpa guy also doesn't seem to charge too much for setting up his entities, ~$200/hour to be specific. He also claims that the legal structure he uses, is better tax optimized than the common LLC taxed as an S-Corp setup.

Some of his explanations make sense but given that he is out of state, he seems to be really busy and not very responsive. I assume because he is running a business all by himself.

I appreciate your suggestions about calling the CPA board. I will do that. Thanks again!

[omega13]

I would lean towards CPA for entities that I'm most concerned about taxes on, and get an additional attorney review for entities that deal more with asset protection.  However, I would not give extra credit to an individual with both qualifications, especially when one is lapsed.  I would actually avoid that individual.  I want someone who is focused on their speciality, and at the top of their game.

Agreed.

The double-credentially practitioners I know and have worked with are usually either *really* one or the other. E.g., an attorney who practices law but who also happens to be a CPA... or a CPA who is really an accountant (maybe a tax accountant) but who also happens to be an attorney.

This is great feedback from the PROs. Thank you!

[cpa cat]

1. How to best prepare minutes.
2. Need help with a good operating agreement. One of the entities may be used for purchasing a rental so I want to make sure that I have good liability coverage in the language used.
3. I don't have an office location and would like to avoid using my home address in the application. Even the state's website actually recommends not using your home address. I need to go through them to ensure somewhat of a privacy stance and protection from frivolous suits. Any tips on this one? Asset protection seems to be another whole ball of wax with many dodgy characters.

1. Remember that minutes are supposed to be prepared by the Secretary - not some attorney who wasn't at the board meeting. When you're having a meeting of one, it can seem weird to write minutes. What are you supposed to be meeting about anyway? Well, there are a few things, and I can see how a brief consultation with an attorney would be helpful in laying down what needs to be covered.

2. Can't advise.

3. You would want to hire a registered agent service - this would provide the physical address where papers could be served. You can Google "registered agents" or find a list on the state SOS' website. Cost about $100 per year. And then a virtual mailbox to use as a mailing address (Google, again). Some registered agents may also provide a virtual mailbox. You could also rent a PO Box.

[omega13]

1. Remember that minutes are supposed to be prepared by the Secretary - not some attorney who wasn't at the board meeting. When you're having a meeting of one, it can seem weird to write minutes. What are you supposed to be meeting about anyway? Well, there are a few things, and I can see how a brief consultation with an attorney would be helpful in laying down what needs to be covered.

2. Can't advise.

3. You would want to hire a registered agent service - this would provide the physical address where papers could be served. You can Google "registered agents" or find a list on the state SOS' website. Cost about $100 per year. And then a virtual mailbox to use as a mailing address (Google, again). Some registered agents may also provide a virtual mailbox. You could also rent a PO Box.

Thank you for the suggestions. I had no idea you could use a virtual mailbox as a business address. Do you have any recommendations for a good meeting template? Do you use any of the legal form sites?