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Discussion:Fee Setting

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Skq9545 (talk|edits) said:

18 January 2007
I have a questions about setting fees. I am under the impression that I may be charging too much. When I have looked at a few tax preparation fees charged on previous returns, I see that they have paid a lot less than I charge. Does anyone know what H&R Block charges? My fees were set based on some rate structures I received from an accountant in Indiana and from New Clients, Inc.

Pegoo (talk|edits) said:

18 January 2007
Maybe you can list you fees out here and we can give some commenting on the structure. Pricing usually depends on the location and demographics.

Tdoyle (talk|edits) said:

January 18, 2007
These past discussions might help:

FYI - To find these, I just typed "charge" in the search box on the discussion forum index.

- Tim Doyle, TaxAlmanac Moderator - Talk to me 12:24, 18 January 2007 (CST)

Skq9545 (talk|edits) said:

18 January 2007
My typical fee for a 1040 with a schedule A, Schedule C and Schedule 4265 could run between $350 to $465. If I have to go back and do a lot of clean up work, it could run $700 or $800. Corporations start at $500. I did go back and read the previous discussions TDoyle listed.

Deback (talk|edits) said:

January 18, 2007
I just charged someone $90 for a 1040, Sch A, Michigan, and Property Tax Credit. She was here for 20 min, and that included more chatting than normal, since I'm not real busy yet. Her fee last year was $80. Normally, I would probably charge $100 for this, but she lives on a $10k state pension, $16k SS, and paid $10k in mortgage interest last year. I'm also holding her check until Feb 2nd.

Deback (talk|edits) said:

January 18, 2007
Skq - What is Sch 4265? How much time is involved with a Sch C that runs $350 to $465?

Tdoyle (talk|edits) said:

January 18, 2007
I wonder if she meant 4562?

JR1 (talk|edits) said:

January 18, 2007
I'm right with you Skq...you're fine. Don't compete with those guys. Get good clients who appreciate good service.

Will (talk|edits) said:

18 January 2007
I charge $5 per asset on 4562. 1040 with A, C, SE would come out at $300 plus depreciation. State included. Where are you located Skq and are you charging per form or by the hour?


William Price, EA | Portland, OR - Talk to me

Death&Taxes (talk|edits) said:

18 January 2007
Shirley: I'm curious about your location, and whether you are taking client's numbers or developing them [bookkeeping]. One of my first 'in front of me' clients on February 13th will be a C, 4562 to expense his new camera equipment, 8829, A & 1040 with Solo 401K computation, plus PA, Plus Philly business taxes [City gives us the software for nothing and we file them in batch in May, but client pays with a voucher]. He brings a Quicken report with details of all accounts, which I use dropping numbers in the software as we sit, but taking it back home to finish. He asks many questions in his hour, hour-fifteen, and eventually files the return in the summer after his pension is funded, so that means extension preparations. Last year's fee was $400, up from $350. Total time probably a little over two hours; when he leaves office he pretty much knows the Federal & State result.

Skq9545 (talk|edits) said:

18 January 2007
I am in Greeley, Colorado. Some clients give me their Quickbooks G/L, but I still have to go through it. A lot of clients charge their personal expenses to the business, so all of that has to be backed out. I probably end up spending 4 to 6 hours on a return.

For taxes, I charge by the form. I charge $5 for each additional asset on the (yes, you are right) 4562.

JR1 (talk|edits) said:

January 18, 2007
4-6 hours!!! Whoa, Nellie, something ain't right, and you're not paid well enough after all. I spend 30-60 mins tops or else the fees will skyrocket. This time of year, there are too many willing customers for me to burn up a 1/2 day without charging for what I could have done in a 1/2 day of others' returns...

Deback (talk|edits) said:

January 18, 2007
I agree with JR. If I spent 4 to 6 hours on a Sch C return, that would probably include time to do a lot of their accounting, and my fee would be more than $350 to $465. My Sch C clients bring me a sheet or sheets listing their total expenses by categories, and it's just a matter of typing in the amounts on the Sch C and 4562. Most can be done in less than an hour and many only take 30 minutes. Some of my large farms take about an hour and a half or less. I charge by the forms, but it comes out to about $100-$125 per half hour, depending on whether I give the clients discounts for being long-time clients or for lower-income clients.

Death&Taxes (talk|edits) said:

18 January 2007
I try to bill $200 an hour in season, but with well organized sheets, as Deb calls them, I can get Fed, State & City done in that hour and bill $250 if the C is simple enough, or if it is an E instead of C [Philadelphia treats rentals of any property you don't live in as a business] but then the fee might be $225. 1040, A & B might should be 180-200 with state as long as B is not lengthy....I schedule for an hour but tell stories, jokes etc, show them the view of the river and part of Independence Hall so they feel the personal touch, and I do answer questions as I work. Review them at home before printing. Doing them by mail, sometimes they are done is 15-20 minutes, or less. Hope they never want to see me do them.

Estock (talk|edits) said:

19 January 2007
I just increased my fees this year due to a colleague of mine teasing me about how little I would charge. I USED to charge $90 flat fee, then per form. I did do a lot of $90 returns, but the average would be $110-$135 (Sch A - $20, 8453 - $25, my outstanding, eager to please service - priceless). My beginning fee now is $100, and the form fees increased as well. I no longer charge for e-file (-$25) but increased almost all forms by $5-$15. In the past, a Sch E with depreciation would have cost $160, now is $220. My wonder is how I will explain this to my existing clients, especially because I have alway been a volume preparer (1100+ returns in my small, 2 preparer firm), so in essence, I have given myself a giant raise this year. I figure that some might be p.o.'d, but on the bright side, all new clients so far think I'm still reasonable!

Estock (talk|edits) said:

19 January 2007
Oh, another thing that changed my fees this year was seeing new clients bring in their returns prepared by H&R and having paid twice as much for their service...(alright, maybe there was the rapid refund fee added, BUT STILL!)

Death&Taxes (talk|edits) said:

19 January 2007
Elizabeth: Good for you. Your clients know damn well what H & R charges and what a bargain you are, especially when you give the personal touch while Block sends out a different person each year. Your office is open all year with a full year of overhead. You will be there if they have a problem. I adopt the motto: "Never celebrate, never mourn and never explain." Or paraphrase the late Guy Lombardo, who appeared in a Laugh In blackout saying "When I die I'm taking New Years Eve with me." Substitute "Tax Season" for NYE.

Skq9545 (talk|edits) said:

19 January 2007
I had some real doozies of clients last year, and nothing was straight forward. That is the reason it took 4 to 6 hours to complete a return,not just a schedule C, plus gathering other information from them that was not apparent in what they brought in. It seemed everyone of them tried to write off personal expenses as business expenses and it took time to get the costs separated out. Some of them had not filed for two years. It seems I did not get the cream of the crop. Probably the ones I ended up with were the ones no one else wanted to take on. This is my second year doing this and I hope I get a lot of new clients. Any suggestions on how to get them in the door? We have Libery Tax here, Jackson Hewitt, 2 H& R Block offices and at least 28 other accountants. We have placed a coupon in the ValPak this year.

Death&Taxes (talk|edits) said:

19 January 2007
Shirley: watch out, I have two musicians who live in Greeley. One teaches at UNC but these former Pennsylvanians both play and have perhaps 20 W-2 forms plus 1099s between them, and for multiple states. I'll sic them on you! Seriously, clients from recommendations win out every time.

Skq9545 (talk|edits) said:

19 January 2007
Thank you. Seriously, I have real concerns about getting business in the door and maybe I am just paranoid after last year. Of course, we were not advertising then, but were doing telemarketing, concentrating on getting monthly clients.

CrowJD (talk|edits) said:

19 January 2007
I think the way people like D&T do it is very smart: concentrate not on the area of tax law in which you practice, but the type client you service. I know a guy here who has a practice where he does many returns for psychologists/psychiatrists. D&T seems to have a lot of musicians/preforming artists. Not only do you get more referrals, you can really focus your marketing; and you are known as the "go-to" person for that type of taxpayer.

Bottom Line (talk|edits) said:

20 January 2007
Our problem here is that Liberty is advertising $20 for a tax return. Of course we know that that only covers one W-2 and the ad is basically a bait and switch but try explaining that to clients. That said - everyone gets an increase this year.

Rgtaxservice (talk|edits) said:

20 January 2007
BL - I've got a Liberty Tax Service about three blocks away. I keep telling my wife that I'm going to tie a rope around the giant 20 foot statue of liberty replica, pull it down with van, and drag it to the river.

Lizzit (talk|edits) said:

20 January 2007
Your fees should be commensurate with your knowledge and skill. Do not set your fees to compete with the tax shops; set them to compete with CPAs in your area.

Do the following AFTER tax season this year:

1) Find a Unique Selling Point for your business. It may be focusing on one particular industry, or it may be in the quality of service (great secretaries, great reminder system, hand-holding, personal attention). You can also differentiate yourself by focusing on a particular segment of time in the tax-filing cycle: some accountants only do delinquent tax returns, some handle only audit cases, and some only amend H&R block boo-boos. You may find specializing in trusts, small businesses, or self-employed contractors to be valuable niches. Or, you can do something tangential during the off-season, such as offering mortgage products, becoming a licensed financial planner, teaching tax courses and seminars, or writing tax books. With the rise of the internet, you no longer need to pick something that's local to your area. The most profitable niches are those that turn tax into a year-round business (since you get three to four times as much earning power).

2) Once you have your USP, create a marketing plan. This plan should include: ---Advertising where your target audience reads between Jan - Apr. ---Website ---New signs for your office and windows. ---Brochures to post. ---referral discount programme for pre-existing clients to send you additional business.

The more specialized your USP, the higher your fees can be.

Remember, you only have so many hours a year in which you can work. If you waste those hours on folks who only want to pay $50 per return, you have a low maximum amount of earnings you can make in a year. Ideally, you create a sleeping income for yourself. Sleeping income is the kind where you make money whether or not you work today. That can only be done by building your business up to the point where there are sufficient employees and a clever enough fee structure so that you make money even when you're on holiday.

Estock (talk|edits) said:

20 January 2007
D&T - I like the never mourning and never explaining, but I sure do like to celebrate!

Gosix (talk|edits) said:

20 January 2007
<Some clients give me their Quickbooks G/L, but I still have to go through it. A lot of clients charge their personal expenses to the business, so all of that has to be backed out. I probably end up spending 4 to 6 hours on a return. >

S Corp and related 1040,

6 hours re/creating the books, 1120S, quarterly 941's for under 4 employees, 940, state witholding forms, state unemployment return, W2's, financial statements, one personal 1040. $1200 Bring any other S Corp owner in and their 1040 is a flat $200, barring something majorly unusual like 2000 schedule D transactions.

Gosix (talk|edits) said:

20 January 2007
<I've got a Liberty Tax Service about three blocks away. I keep telling my wife that I'm going to tie a rope around the giant 20 foot statue of liberty replica, pull it down with van, and drag it to the river.>

Take this "Tax Done Here" trailer with you:

http://pg.photos.yahoo.com/ph/gosix/detail?.dir=837fre2&.dnm=b43are2.jpg&.src=ph

Chase (talk|edits) said:

21 January 2007
That's hysterical!!! I'd be scared to death to go in there!! Very funny!

Estock (talk|edits) said:

21 January 2007
I love how you can order prints of this...

Gosix (talk|edits) said:

21 January 2007
And I swear I have seen the police at this trailer about once a week in the past.

Estock (talk|edits) said:

21 January 2007
Hey, the police file their taxes late sometimes too!

Skq9545 (talk|edits) said:

22 January 2007
Liberty Tax had a notice in the paper here to bring in a, I think, can of dog food to donate the the Humane Society and get a $30 discount on your tax return. They have this set for this Saturday. Will have to drive by to see how many takers they have.

Rgtaxservice (talk|edits) said:

23 January 2007
I wasn't able to drive by there Saturday. One of their lackies was good enough to post Liberty Tax Service ads to every front door for a five block radius...all except mine. These guys are getting under my skin.

Bluesboymark (talk|edits) said:

23 January 2007
I picked up my father's clients when he passed 3 tax years ago; had helped him out here and there. I do have a Day job - good pay and benefits, but lousy retirement...

Anyway, I start at $20 for high school kid with parent; $40 for college kid; $60 for others; and have charged only $300 for some doozies who should have been much higher - 1120S, 3 rentals on E with no real bookwork to start with, 1040, A, MI, MFJ with 2 W2's, etc. He always undercharged, and I felt that I should continue with his clients that way.

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