Discussion:Tax year wrap up (warning very long)

Tax revenue: $ 1,800

Accounting revenue: $ 250 (quickbooks setup)

Expenses: $ 1,010 (this includes cash flowing all expenses for the year, including a new all in one and leather chair --on a huge sale at Office Depot)

Okay, quit laughing all you 350+ return preparers! ;-)

I had ten clients total. Three sole proprietors with schedule C, an international adoption with employer reimbursement, and the rest with normal personal returns. However, all but two of the personal returns had something significant that needed researching. Average client price was right at about $191. Each and every client referred me to at least one other friend or family member who used me….that's a good gauge of my service levels, I think. Unfortunately, my best contact (they have lots of friends who have similar business) came along later in the season and their friends/family had already filed. I hope to get more from these clients next year.

Lessons learned:

1-Quit being so nice to clients. I gave my first two clients a lot of extra free help getting their bookkeeping systems started and help with forms they wanted to file themselves to save money. The help was limited to a couple minutes here or there but at some point should have been billable. I have already started moving towards billable now that they are stabilized and I am doing the tax returns.

2-E-file provider brought me none, zero, nada clients. It increased revenue not one penny. Without it, I might have lost a client but it isn't what brought them to me.

3-Meeting clients to pick-up/drop off returns was a giant PAIN IN THE BUTT! But it certainly increased my revenue and kept people out of my home, which is paramount to anything else with kids. It cut my hourly average rate but there were no other options.

4-Contacting clients from the new business listings…hmmm. A complete waste of time and cell minutes except for the two clients I picked up that will probably bring more tax clients next year (especially since one was expecting to have to pay and I was able to get them a large refund). Very hard to hear no that many times. I may switch to calling these people three months after they start the business instead of the week they file their licenses. Most utter the prhase that makes me cringe "I don't need a Bookkeeper or Accountant" followed by "what are quarterlies?" when I challenge them a little on their knowledge.

5-Client avoidance. A very very kind individual on these boards sent me some overflow referrals, four of which called. I took them all except for one self-employed insurance saleslady who hadn't filed 2006 or 2007 (yet). I told her I would do her returns for what the referring EA would do them for--she said $110 (turns out she LIES! :D). I knew it could happen but some of these referrals were his current clients who he couldn't do because they came late in the season and he was booked. So I considered these clients to be more of a temporary referral for this season, after which they would go back to the EA. So I didn't want to spoil his business by charging more than he did. Any mutually new clients he sent were at normal rates. Based, however, on my gut feeling, her lack of interest in meeting me half way (she said gas was too high), and a couple other factors I increased my price to $150 per return. A net $80 more. She bolted, which told me her check would have probably bounced anyway. All my clients were great, albeit a little confused as to proper bookkeeping. Everyone was cooperative and it felt great to help some small business owners get things going and hopefully build some goodwill.

6-Pricing. Next season I will keep my current clients at their current price and establish minimums for new clients that take into account my travel time and gas money for meeting clients. If the client wants me to do them, they pay my price. If not, that's okay. I am, however, competing with a lot of very low ball offers. For instance, I was going to charge a lady with a simple W-2 and nothing else $75. She paid $45 E-filed last year so I had to take that price or lose the client. Since she was very local, I did it. People find a LOT of low cost preparers so that keeps me from charging the national average.

7-Quickbooks setup and training. I will push this product and charge a lot more for it. I charged my client $250 for it but even that was cheap. Granted much of my time spent was learning it myself, so it was hard to gauge a true hourly wage for myself. I have the basic template for Sole P's and LLC's set up and I can tailor the setup to the client very quickly.

8-Good colleagues like yourselves and the EA are a Godsend! I tried networking with some local Accountants and preparers for some overflow work but none came through. You guys have been a true Godsend and I can't express how thankful I am to have found this place….I hope to give back as much as I get going forward. Special thanks to the EA that helped me from this board (although I don't see him posting much anymore--too busy I suppose), I will never be able to repay you for helping me get started.

9--Marketing. I tried calling the new business listings for my County (new licenses are updated weekly) and that netted two business clients. I push pinned 350 fliers to mailboxes in the neighboring subdivisions until I had a nickle sized blister on my thumb without a call. I advertised in the local school paper and a couple other places...not one call. Like a diamond, time and more time and honest hard work at a good price is the key.

Remainder of the year:

I started this business with the intention of doing bookkeeping but tax work was both fun and profitable. I believe I picked up the bookkeeping work of a large trade organization here in GA that will start in July and net about $1,000 per month. If it comes through beginning July 1, I will be a happy man as my wife can do a bulk of the work and I can supervise. It gives her a chance to earn some money for the family (she's been missing that) yet still have flexible hours to do things with the kids---the reason she quit a high paying job to begin with. I will continue to look for more bookkeeping work while I try to build a larger client base for next year's tax season. Also, one of my notebook paper clients is forming an LLC for his landscaping business and will employ me to set up his quickbooks.

Well, that's it folks. Considering I am a home based business with very little name recognition beyond my current client base, I am very happy with where I am. I am profitable while cashflowing my expenses with no debt. I have tried everything to get new clients but it seems that only patience and referrals are the key.

Any suggestions will be considered, bastardized, taken credit for by me, and used how and where appropriate! 8-)

Michael

By the end of tax season, I was a bit fed up with a couple of my clients but now I love them again. It really is a good feeling to be able to show someone how you helped them.

The realization of the fact that hour-for-hour, I could have made more money delivering pizzas is hard to take but I am building something here.

Thanks, Michael

Don't worry about your client base building, it will happen if you keep at it, I can't remember the last time I advertised. Average pricing is just that, average. You'll have to get the feel of your clients in order to know what to charge in general. After 95% mailed ins late year thus year was 75% efiled, raised my rates on this and clients loved the new speed. I would suspect that you're a little late for this progression as it is more of an expected service rather then the exception. What you shouldn't miss out on is electronic communications, ie, email. I finally collected all the addresses and will be sending a monthly 'tax tip' emailing, and a more indepth quarterly one. I will certainly 'encourage' my clients to forward these on. I am also in the process of getting my zoning in place, anclosing my porch and getting my sign out on the somewhat major road I'm on. For me this will feel that I have officially arrived.

I don't worry too much about losing clients. I have two types, ones that I simply file their stuff away for five years, then toss, and those that I will continue to send my mailings to for 10 years. I do a Xmas letter, not store bought, I write up one a year and mail these to everybody. I also keep a separate list of everbody I meet and put them on the list for at least three years. It seems like a lot but it's in leiu of general advertising. I won't do my immediate neighbors returns, but I'll review them if they ask. I want my neighbors to be neighbors first!

I will never miss an opportunity again to continue to educate, press palms, network, and try things outside the box. Despite some other peoples misgivings about my going out for pickups and deliveries, I made this an integral part of my business, and for me, it works.

Finally, I did think up some goals for me for this, and for future years, and mostly wrote them down. I achieved the first one at 3:00pm on 4-15. It was an income issue and I must say that whenever I felt like 'giving someone a break', the urge to discount went away....mostly...LOL

Good Luck

My goal is 1) to supplement income while my wife is out of the workforce, 2) to build something that will prevent any merger or boss from taking away my livelihood, and 3) to potentially build something that I can pass to my children after they join my firm.

Michael

good job...I was in the same boat as you are but I started as full time and I do complete package Accounting/payroll/tax returns and I did 18 tax returns...my leads came from telemarketing..there are national companies that can setup your appointments and you go and sell your service..because I do complete package, over 90% of the tax returns I did became my permanent clients and I am averaging $300 per month per client...this is great business if you have the knowledge ans desire to learn more about tax code...I learned so much about tax returns that I can not believe...I did 10 1120S and 4 very complicated 1040 with number of C and E schedules...this site has been so helpful...I do have some friends who are CPAs and that helped a lot as well...good luck for the next year I am sure you will at least 5 times more...that is my goal for 2009...

I'll get you next time.

Thanks,

Michael

I can say that my business grew by leaps and bounds this year. After having started the business from the home two years ago, I decided I would not continue that route. Too many times I found myself working in the office and ultimately working for free. I would tell myself that I was researching because I did not know the material --- I now know that we cannot know it all and need to bill for things that need to be researched. I moved out of the home and into an office with a friend of mine who had just completed his Masters of Accountancy and had just passed his CPA exam. I was out of home and confident that I can bill properly. (I know --- warped).

He knew nothing of real world accounting, but was great as a financial advisor (that is what his own business provided). I had no clue how to setup SEPs, SIMPLES, 401(k), etc., and really did not want to know how. So, we helped each other. In December we moved from a 600 sq/ft office space to a 2,100 sq/ft office space, have hired a full-time staff accountant, and a part-time administrative assistant. I have gained over 35 new business clients which in all total 75+ returns ranging from easy 1040s to many Corporate, S-Corp, and partnership returns. My (soon-to-be-partner) gained over 5 new business clients and was able to process over 15 returns for his advisor clientele. We have also just recently gained two very large accounts which we will provide the daily write-up work for, payroll for over 75+ employees from each account, tax planning, advisory, tax preparation -- the list goes on.

We will legally partner up this year. I will finally attempt to take my CPA exam (I absolutely detest exams and should have taken it right after I graduated 3 years ago). We are meeting with advertising and marketing groups in order to produce brand name and image. We plan on providing accounting services (no auditing---financial statements, bookkeeping, etc), logistics/IT support for small businesses (desperatly needed), and will potentially move into TPA services (this is my partner's thing), and will provide consulting to financial advisors and companies in order to fulfill their requirements with agencies, such as DFI.

I cannot state how much this site has helped. Nor can I state how much referrals are the gem of our practices. I have been a part of a referral network for almost two years now and I knew if I stayed, it would pay off. It has.....and worth the $600 a year in dues.

Sorry so long -- just EXCITED!!!!!