Tax preparation rates

[rich]

hi

it will be my first year preparing taxes as i got my EA license this summer, can i somewhere find the reasonable rates to charge the clients.should it be flat fee or per forms?

i expect to do 1040 and some 1120s.

thanks.

Rich

[kcjenkins]

Rich, you will have to set your own rates based on your experience, your costs, and your competition. My advice would be to set your rates around H&Rs rates, but don't be too concerned with price shoppers, who want you to bargain, because those folks will not be loyal anyway. Set your price, and stick to it, because if you bargain, it means to the client that you were overcharging them with your stated price.

But if you are using ATX, by all means use the coupons that are in the forms, and tell every client that if they use them they can get back part of their fees that way. Type in "customer referral" to find it, add it to every return, and hand them out generously. That's the best advertising you can get.

[Wayne Brasch]

Rich,

First of all, let me congratulate you on having passed the EA exam. As far as the rates you should charge clients, I would consider what would make you a comfortable living keeping in mind that you want clients to come to you instead of going to your local competitors. Depending on where you are located, preparation fees vary greatly across the country. There is no one place to go to get a list of rates. I suggest you check out rates charged by others in your area.

Also, welcome to this forum. Much can be learned from all the great people who post on this forum.

Wayne Brasch

[rich]

Rich,

First of all, let me congratulate you on having passed the EA exam. As far as the rates you should charge clients, I would consider what would make you a comfortable living keeping in mind that you want clients to come to you instead of going to your local competitors. Depending on where you are located, preparation fees vary greatly across the country. There is no one place to go to get a list of rates. I suggest you check out rates charged by others in your area.

Also, welcome to this forum. Much can be learned from all the great people who post on this forum.

Wayne Brasch

Thanks, Wayne , KC. I just looked at customer ref. forms. Its a nice marketing tool to discover and appreciate advice.

[kcjenkins]

Referrals are far and away the best way to build your business. Pricing yourself cheap will only attract cheap clients, who have little respect for you because they know you are the cheapest place in town. So stress your qualifications, [that EA] and don't be humble. Tell them you are not the cheapest, but you are much better than someone who just took a 10 week course at H&R. Then after you make sure you do a good job, ASK for referrals. Maybe even send "Thank You" cards to those who do send you a referral. Don't waste much money on advertising you buy, except for yellow page ad. That is not how people pick a preparer. A sign on your office, if you have one. If you work from home, don't worry about signs, spend the ad money on your yellow page ad, or on memberships to groups like Rotary, Sertoma, Lions, etc, where you can meet people who may become clients or send you clients.

[mcb39]

Rich, you will have to set your own rates based on your experience, your costs, and your competition. My advice would be to set your rates around H&Rs rates, but don't be too concerned with price shoppers, who want you to bargain, because those folks will not be loyal anyway. Set your price, and stick to it, because if you bargain, it means to the client that you were overcharging them with your stated price.

But if you are using ATX, by all means use the coupons that are in the forms, and tell every client that if they use them they can get back part of their fees that way. Type in "customer referral" to find it, add it to every return, and hand them out generously. That's the best advertising you can get.

KC.....I never knew about that form until today. Thanks for the info. I am not trying to increase my client base at this time, but I am sure than many others on this board are. How many other "goodies" are out there that some of us are missing? Never too old to learn something new.

[kcjenkins]

I guess we should remind folks every year in Jan, so that all the newbies learn of it.

[joelgilb]

Although I bill by my time (with appropriate markups when necessary), I did some research a couple of years ago and copied fees from a few sites and then created an Excel Spreadsheet to compare them. Most of it is by form, and I have found if I had charged by the form my rates may end up being too high.

Note that some of the fees here are a few years old and therefore out of date. Still it may be a helpful guide

Note that the spreadsheet also has a range of hourly rates from roughly $75 to $250.

Also a lot depends on where you are located. Fees in New York, Los Angeles or Chicago for instance are much higher than Little Town USA.

Anyway here is the spreadsheet for any that want it.

Tax_Ret_Prep__Fees_Comparison_ATX_User.xls

[joelgilb]

Well I see a number of you are downloading the spreadsheet I created.

Any comments?

[samingeorgia]

Thanks for the info, Joel!

Last year I input some forms, etc. into ATX and let the program compute the fee. In about 80% of the cases, I discounted the fees from 20 - 50% (long-time clients, having a hard time, etc.) -- new clients and PITA's no discounts. My fees are closest to B & C in your spreadsheet. A & E are way too low, and I don't think the traffic will bear D rates.

The ones at the bottom ("Fee Structure") -- in my dreams!

I wish I had started doing this 20 years ago.

[GeneInAlabama]

Thanks Joel,

I have been thinking about billing by the hour but have been hesitant because the same form for one person can be so different for another. I find it impossible to bill by the hour due to interruptions I encounter (I am a one horse business and have to answer my own phone and talk to people who pop in with a question). I have been charging what "seems to be about right" based on approximate time spent on the return. Most of the returns I do are "drop-offs". Maybe I can work something up using your rate chart.

I appreciate the willingness of people on this board to help each other. I wish I was capable of being more help to those on the board, but feel rather inadequate compared to most on the board.

Gene

[GeneInAlabama]

Well I see a number of you are downloading the spreadsheet I created.

Any comments?

Joel, I think you are bluffing about knowing how many people are downloading the form, but thanks anyway. I for one did download it and found it helpful. And I do believe quite a few are downloading it. By the way, I missed seeing you and glad to see you back.

Gene

[kcjenkins]

The number of downloads is shown automatically, so we all know how many.

[GeneInAlabama]

The number of downloads is shown automatically, so we all know how many.

OK, I see that now. It was staring me right in the face and I didn't see it. Pretty neat!

[Gail in Virginia]

I am always interested in seeing what other people are charging for tax prep, but I don't usually change my fees as a result of it. I live in a rural area, which has lost most of the manufacturing jobs that were once available and where construction jobs seem to be stalling out about now. It is not a good time to raise rates. But I don't try to be the cheapest place in town - I will leave that for the shops that are making their money from the RALs. I do try, however, to be the best in town and I think this board helps a lot with that. :)

[Lion EA]

Thank you very much, Joel.

[Catherine]

Thanks, Joel, for the spreadsheet. I'm going to take a good look at it later.

I charge by form and discount as needed. Can't justify charging $50 for a Sch D when there's only one item on it, or one carryforward loss amount. Also discount for good clients, long-term, neatness/completeness of paperwork submitted to me (less work!), senior, military, family (mainly college-age kids of clients).

I don't discount (nor do I give referral coupons to) PITA clients (they send more PITA folks; not what I want).

Catherine

[Lion EA]

I also charge by the form. Then I think about how much time I spent. As Catherine does, I discount when appropriate, such as a Schedule D with only a carryforward. I also add charges for lack of completeness, messiness, etc., and call it something like a worksheet. If you aren't used to charging by the form, charge by the hour. Or, keep track of your hours and compare it to the forms charges to make sure you're charging what you know you're worth for your locality and to see how much time some of your most common forms take you to complete for your typical clients. I also have discounts for children of clients and send a discount for next year to clients who sent me new, good clients. I get clients from church and my broker and a lawyer from church, so I take a plant or book or other gift to my broker and the lawyer every once in awhile and let the church fair include my services in their silent auction every few years.

[joelgilb]

Joel, I think you are bluffing about knowing how many people are downloading the form, but thanks anyway. I for one did download it and found it helpful. And I do believe quite a few are downloading it. By the way, I missed seeing you and glad to see you back.

Gene

Nope,

Eric setup a nice site for us with lots of features. Look at the post where I uploaded the file, at this point 80 downloads!

[Lion EA]

We are a curious bunch, aren't we?!

[joelgilb]

As far as charging by the hour, you essentially need a decent time clock software.

I used to use TimeSlips and then switched to the QB Timer bundled with QuickBooks.

If someone calls that I am going to bill, just switch to a new timeslip (lingo I still use from TimeSlips, but QB calls it an activity) without turning off the clock at all, and immediately the new slip is accumulating your time.

I can look, at any time at Time Activity Log and use it to add a bill int ATX and still export to QB for my own records.

Has abilty to accumulate time in multiple rates, items, add classes etc. You can add additional and specific descriptions which will be added to the default descriptions from your items listed in QB, upon import into QB.

One of the few things Intuit did right (for those of you that know me you know I HATE INTUIT).

I can also use it in conjunction with Intuit's Billing Solutions (a pay for service of Intuit/QB) and Merchant Services (Intuits Credit Card Service) to facilitate getting paid by credit card and emailing bills to clients. And Billing Solutions will send out automatic reminders of unpaid invoices to my clients that I bill. Its like have a billing clerk without a salary!

And well for an Attorney, the Courts often require us to have very detailed line by line bills.

Only thing it doesn't do well that TimeSlips did is round invoices to the nearest "?" (you fill it in - tenth, sixth, or quarter hour or nearest multiple of $5, or $10), and I find I have to manually round off my billing items.

[joelgilb]

I am always interested in seeing what other people are charging for tax prep, but I don't usually change my fees as a result of it. I live in a rural area, which has lost most of the manufacturing jobs that were once available and where construction jobs seem to be stalling out about now. It is not a good time to raise rates. But I don't try to be the cheapest place in town - I will leave that for the shops that are making their money from the RALs. I do try, however, to be the best in town and I think this board helps a lot with that.

Agree.

I bill what I bill. You don't like it, go somewhere else!

[Catherine]

Agree.

I bill what I bill. You don't like it, go somewhere else!

Every now and then I get asked (on the phone, by price-shoppers) if my rates are negotiable. My standard answer is, "Absolutely! -- Upwards only." That usually shuts them up real quick. If they don't hang up right then and there, the caller will frequently become a good client.

Catherine

[Lion EA]

My software has timing built in; I can start and stop and adjust. I've been going by the form, but plan to time next season to make sure I'm not shortchanging myself. ProSystem fx

[Catherine]

<snip>

Anyway here is the spreadsheet for any that want it.

Joel --

Just spent some time with your spreadsheet and compared my rates to the listed ones. It was really interesting. For the most part I'm on the higher side of the listed forms, but lots of the subordinate/auxiliary forms others charge for I don't charge for.

But what really caught my eye were the corporate and partnership rates (only two listed). Wow, are they LOW for around here!! I charge way -under- what most folks around here charge for 1120-s and 1065, and my rates are way -higher- than the ones you list.

For example, and accounting-only client of mine, a partnership, gets their 1065 done by the CPA who referred them to me for accounting work, and he charges about $1200 a year. I charge my partnerships around $550 - $600 -- but your spreadsheet shows $260 to $399 for a 1065. The partnerships I have would -not- be worth it to me at $400.

Catherine