Discussion:What to charge for 1065?

need more information:

1.)How much work is involved 2.)What is the complexity of the return 3.)What are the partenrships revenue and expenses? 4.)What is your background and tax prof'l skill level? 5). What stae do you live in ?

Question: Why are you only charging $30 for a tax return ?

Will

They actually have two businesses so there are two partnerships. One a very small trucking company the other is a farm. Background is 1040's and Sched C, A, F etc., I'm still pretty new. State is Ohio. Charging $30 because I'm new trying to get business.

My humble opinion is that even though you are new, charging low won't necessarily get you more clients, at least not clients that will build you a successful practice.

My advice might be to consider the approach that even though you are new, you are still someone who will offer great tax service to clients and save them as many tax dollars allowed by the tax law. If you charge a better price current and prospective clients will respect you more (i know it sounds crazy). (if soemone told you they knew of a geat heart surgeon and you asked how much does the doctor charge and the answer was $150, you might reconsider just how good of a surgeon he really is)

Two more points: When you are advertising or spreading the word that have your own tax practice everyone doesn't need to know you only have a few clients and just started. You can say "i have my own successful tax practice i recently started but its going well so far" or something to that affect.

Second, you don't have to charge overboard either but maybe somewhere in between because at some point when you have a good paying client base the $30 returns will really drag you down time wise and financially. So why don't you find a middle ground, do a little research on tax prep market value in your state. i would say charge at least a minimum of $100 until you feel comfortable. i only tell you this becasue i went through the growing pains and maybe you can avoid some of them. Eventually you will see that good paying clients appreciate your service, will thank you, and are a pleasure to work with. The low paying clients come and go, many times are just "price shoppers" and they many times are pains in the neck and always haggling.

That being said and this is just my opinion: for the 1065's if i was just starting out in Ohio wi ould still give an estimate upfront fee of about $200-$300 each. If the client says it's too much, you can lower it a bit. In a few years when you have more experience and confidence, you will be asking for fees of $350-$700 for a 1065 without even second guessing yourself, and you will be surprised how many times you get the new client. remember, the first year initial fee is crucial, it plays a big role in your fee fro that client for many years to come. if you start with a low fee, it will be very difficult to increase them to the fair market value down the road.

lastly, see if you can navigate the taxalmanac website for the "getting new clients" topics or how much to charge topics, might help. One more thing, to get new cleitns, just try to read as much as possible on what has worked for others. There are some (very few though) tax marketing practice books out there. check barnes and nobles or amazon and don't forget to be a social bug n dlet everyone know that you have your own tax practice and are lookign for new clients and/or client leads.

keep me posted how things go :)

Best of Luck !

Will

$200-300 huh. My initial thoughts were around $100. Along these same lines my write up bookkeeping fees are $20 per hour. Well I had a local CPA offer me $15-20 an hour to help him out with his bookkeeping clients, so that let's you know how much more he must be charging than me.

Thanks again for the advice, I appreciate it.

Yeah I've taken some classes, I have an Associates in Accounting also. It's def. not the same as actually doing it though. I met with this client before I decided to take it on to see what was involved. It's not terribly difficult....they are very, very organized so that helps out. They also gave me their last two years' returns to look at as well as other info.

One more point on the $30 returns. I know in Ohio salary and expense of living are lower than most states, so an average salary i believe is about $30,000 to $45,000. Over $50,000 you live like a king in Ohio.

that being said even to make just $20,000 in revenue before expenses you would have to do 833 returns at $30 :(

one last point before i get annoying,

if 6 potential clients asked you what you charge and you said $30 and five said ok, that's $150 in fees.

if 6 ask you what you charge and you say $100 and only 2 say ok, that's $200 in fees for 3 less returns :)

May be better to make your fee known (maybe 100.00 first year discount) or discount for referrals and then go from there. If you charge them 30.00 this year and get busy next year, they are not going to want to hear you raised your fees by 100.00 for second year of prep. You can go up slightly year to year, but you can't raise it to anything worthwhile I would not think...imho that is.

Like Kevin said, 1065's are one of the MOST difficult returns to prepare....passive, non passive, material participation, guaranteed payments, etc. Second hardest I think is a C corp, then an S corp and then personal. As for estates, trusts and some quirky returns, they too are difficult for me as I don't do any of these except to help another CPA in my area....

I wish you the best of luck...but try to give it some idea of what is involved. Somewhere I read (perhaps here) that audits of partnerships are high....just an FYI :)

As for 1065's & corp returns, I decided long ago not to do those. Not enough volume to get comfortable with them.

Thanks for the update on Ohio.

Seoas,

Since you have the last 2 years returns and current year is organized, just use the "DILLY" method.

Do It Like Last Year

just kidding.

)

I have to agree with the others by discounting fees you are hurting yourself and our profession. I am in VA and I personally have a min fee for corps and partnerships of $850. think about billing on time not the forms your knowledge and time is what you are selling.

Seeing as your experience is limited, I don't think $250 is unreasonable in either case. It really depends on how complex is it. Is there depreciation? Capital gains? Or it is a pretty straight-forward return. Also, how meaningful was the information the client gave you to prepare the return, or did you have to do a lot of digging to find a lot of unanswered questions.

This is an illustration of how tax practitioners cannibalize each other, to the loss of all. Even the very simplest 1065 should be double the cost of a Scd. C, and even the simplest Scd. C should be $250.00.IMHO.