Discussion:Fees

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Deanp (talk|edits) said:

19 January 2006

I am looking for some input on what to charge people. I want to be competitive but still want to make some money at this. I have been charging per form. $60 for 1040, 50 for 1040A, 35 for EZ, 15 for Schedule A, 30 for Schedule C, etc. If possible I would like some input. I am still fairly new to this and don't want to gouge people.

Skhyatt (talk|edits) said:

19 January 2006
I too am looking for input on what to charge.

Lois (talk|edits) said:

19 January 2006
What part of the US are you in? I'm from AZ and have a competitive pricing structure.

Skhyatt (talk|edits) said:

19 January 2006
I'm in California.

Lois (talk|edits) said:

19 January 2006
Then my fees would be too low for you. I charge $225 for a 1040 / $150 for a Schedule C / $75 for each rental on Sch E. Businesses have a minimum of $400 billing at $105/hr. Of course this varies sometimes with clients. Some of my larger clients I charge the $105/hr for their individual returns because of the complexity and time. I find that the majority of my clients using these fees works out to about the equivelent of the desired average $105/hr. I do have fees for all the other schedules but this pretty much covers it.

MIKEG-EA (talk|edits) said:

19 January 2006
Hi Everyone,

I also would appreciate some input on fees. This is my first year as a full time preparer and bookkeeper. My fees look like this: 1040 w/ State and e-file $100 1040EZ w/state and e-file $56 Also various fees for schedules with limits and additional fees for extra entries.

Is this in line with most other first-year preparers?

Thanks,

Mike

Deanp (talk|edits) said:

19 January 2006
I live in North Dakota. I have been charging 15-20 for state returns. Also I get some people that get RAL's however I haven't been charging more than $5 extra for this. Should I maybe charge a little more for this service?

Gmikeg (talk|edits) said:

19 January 2006
Hi Deanp,

I charge $40 for RAL's. Is this too much?

Also, I changed my ID, I'm not an EA, I'm in the application process.

Mike

Deanp (talk|edits) said:

19 January 2006
Where do you live Mike? It might not be too much, maybe I should charge a little more. Just trying to get all my rates set in stone now, then I can move them up a little in a couple years.

Gmikeg (talk|edits) said:

19 January 2006
Hi Dean,

Santa Fe, New Mexico, the most expensive ghetto on the planet...LOL

Mike

Gmikeg (talk|edits) said:

19 January 2006
Also; I forgot to mention that H&R Block charges much more than I do, perhaps 3 times as much for the RAL fee, not including the bank origination fees. They get up to $400 for a $4000 RAL; The interest must be about $110, and the rest goes to the company as a junk fee.

Mike

DZCPA (talk|edits) said:

20 January 2006
On a new client I use an amount a little more than last year. If your clients feel you are saving them money "Turning the Gray into Green" you can value bill and get your fees up. I raisefees every other year $25 or 10%, which ever is greater. For you Newby preparers, a good starting point would be a bit more than H&R Block. Their price list can probably be obtained from them.

Deanp (talk|edits) said:

20 January 2006
Wouldn't it be a bit less than H & R Block instead of more. I am trying to get their customers so I need to be cheaper than them.

Skhyatt (talk|edits) said:

20 January 2006
That's what I was thinking. Deanp, drop me an email and maybe we can compare notes on what we charge?

Deanp (talk|edits) said:

20 January 2006
Yeah, what is your email address skhyatt? I would appreciate comparing notes.

Skhyatt (talk|edits) said:

20 January 2006

KAM (talk|edits) said:

20 January 2006
I truly think, your location has a lot to do with how much you charge. I live in a economical poor community and my prices couldn't be what New York City would charge. I think location means a lot.

Deanp (talk|edits) said:

20 January 2006
I agree with you on that KAM.

Tdoyle (talk|edits) said:

20 January 2006
Note: If you don't want to give out your email address in the public forum, you can begin an email communication by clicking on a user's name to go to their user page, and selecting E-mail this user from the toolbox on the left side of the screen. That will allow you to send a private email to that person in which you can send them your personal email address, etc. - and you can then communicate via regular email. Note that this only works if that user has entered a valid email address and has not changed their preferences to Disable e-mail from other users.

Tim Doyle, TaxAlmanac Moderator, Tdoyle 12:20, 20 January 2006 (CST)

Captcook (talk|edits) said:

20 January 2006
One thing worth mentioning in this discussion is how you value your work will reflect how your work is valued. An independent tax preparer should be mindful that if you price yourself below a company like H&R block, your clients may value you less than they may otherwise. Do you think you provide a higher quality service than someone would receive elsewhere? If you can show your clients that this is true, the majority will have no problem paying for that quality. I read recently that fees are the #5 consideration in preparing taxes. Also, those clients who are very fee sensitive are likely to be those clients that cause the most headaches.

Skhyatt (talk|edits) said:

20 January 2006
Very good point.

LJACPA (talk|edits) said:

20 January 2006
Lois, I would like to work for you. Boy, am I underpriced compared to you. I called H & R Block and could not get a fee schedule, but I hope to goodness I do charge MORE than they charge. I've been a CPA and in public practice for 19 years, but only back on my own for the last year and 8 mos. I know that I undercharge too often and need to make some major adjustments. Do you really charge a flat starting fee of $225 for 1040s?

Deanp (talk|edits) said:

20 January 2006
Good Luck getting a fee schedule from Block. I worked their for a brief time and I hardly knew what their fee schedule was. We were instructed to not give estimates over the phone and I think I may have seen a fee schedule once. It would be easier to find Bin Laden than to find a fee schedule at an H&R Block office.

Skhyatt (talk|edits) said:

21 January 2006
I called Block and was told the fee schedule wasn't available. I got the impression that they just didn't want to give it. I have worked on a fee chart and just in general came up with the following, although not final, I've been told this is probably to low. Min charge $50, regardless of form. 1040, $75, Sch C, $30, Sch A, $30, 4562, $20 up to three items. Additional forms, etc. generally $10-$15. State of California would be included, except additional forms such as Sch CA. Feedback please. Thanks.

Skhyatt (talk|edits) said:

21 January 2006
I am considering going up, as I agree with what captcook had to say and I'm sure my fees are below what Block would charge.

Jimcpa (talk|edits) said:

21 January 2006
I charge a minimum fee of $150, for the easy ones that take 15 minutes to prepare. H&R Block keeps the clients there for an hour, at least. My fees go up as tax season progresses. I book appointments every 1/2 hour early on, so I make $300 per hour. The clients come in, I prepare the return in their presence and ELF. They know to bring a check. I prepare 400 individual returns. I stated out with 40 clients 7 years ago. I average between 30-40 new clients each year. My average fee last tax season was $228.

TGilliam (talk|edits) said:

21 January 2006
1040 Minimum $250 - average $750

1065,1120,1120s average $850 1041 average $300 706 Average $15,000 709 Average $350

Chautauqua (talk|edits) said:

21 January 2006
I practice in South Orange County, CA, an affluent area. In addition to my forms charges, I charge $60 as a "computer charge", which covers a portion of software, postage, overhead, reviewer. For a 1040 with Sched A, $165. Sched C $85. Sched E rental $80 for first one, $45 for each additional. Taxability of social security $30. Sched D $60 which covers 5 items, then $12 for each additional item. The fees you charge will vary with the kind of returns you want to do. If you want volume and low fees, fine. I prefer to work on more complex returns. My average fee last year was $385, and probably should be higher. I don't want fee-conscious clients. I want clients who value my work and will pay any reasonable fee without complaint. I offer 1/2 hour of free consultation during the year, and very few clients use it. If they overuse it, I will bump my fee the following year. I don't like RALs, as it seems like loan-sharking. If you have low fee clients you will get low fee referrals.

DZCPA (talk|edits) said:

21 January 2006
Something to think about "Double your fees and half of your clients will leave. You will make the same amount of money and work half as much as the year before"

Bean (talk|edits) said:

29 January 2006
What about monthly write-up work, quarterly payroll filings, annual filings such as W-2's and 1099-s? How much would you all be charging for these services? I charge $75-100/month for write-up work, and $50 for any filings done, and $50 for W-2/1099's of less than 10 people.

I, too, am curious what others are charging.

Babeigyrl (talk|edits) said:

29 January 2006
I live in Louisiana and I believe in the method of keeping everything simple. For basic returns I charge $140 that includes federal, state, and e-filing. For any type of itemization I charge $195 which includes federal, state, schedule A &/or C, and e-filing. I serve individuals only because I am currently still going. It would be too much of a headache for myself if I was to charge an extra fee by form. I also offer RAL and RT bank products and on the software it would not allow me to charge more than $40 so that is the extra cost I charge for rapid or other advance bank products.

Babeigyrl (talk|edits) said:

29 January 2006
Deanp, one to gain H&R Block customers as you stated earlier is this. If you know of anyone that has been going to them ask them whatever they have been charging you will beat the price. I have several clients that work for Sam's Club and Wal-Mart, so this year since Jackson Hewitt are located in these locations they are offering them a 25% discount. I simply had one of my clients find out their price and I told them I promise I will beat the price even if it was a lost for me, but acutally with Jackson Hewitt's 25% discount and my regular fees I was maybe a fee dollars less. The long-term situation is I will have a new client for next year! It is not always about the "right-now" money but the growth of your business. For example, I do a number of police officers taxes and they usually have a great number of W-2's and 1099's. I simply make it known that all law enforcement officers have a standard preparer fee of $45-$60 (haven't decided what I will charge them this year), but they always are looking for deals and I am always looking for someone to help will tickets!

Inagpurwala (talk|edits) said:

30 January 2006
Dean Pfiefer:

HRB does have a price scdedule. I worked for them two years ago. There is a trick to get to that list and it is NON PRINTABLE. You (preparer) may need to write it down form by form. Last year I charged 1040 $55, 1040A $40, and 1040EZ $25. I think these rates are too low, but in my town it is a cut throat copm. This year I will charge 10% more or so.

ARTSTERN (talk|edits) said:

31 January 2006
I do not charge on a"Return Basis". My fees are hourly. They are $125.00 per hour for all tax preparation work. I avoid taking simple returns, referring those to "Turbo-Tax" or to HR Block. As a semi-retired practitioner I do not seek too much business. All of my clients have some income and/or expenses which are substantial and have some degree of complexities. I therefore choose to charge by the hour. Incidentally, If I have to attend an IRS audit, my fees are between $150. to $225. per hour depending on the complexity and the level to which the audit may go.

Lalva (talk|edits) said:

31 January 2006
What a great subject! I am starting this year too and I didn't know what to charge. I love the person who said that if you charge low fees you will get low income people or "headache" ones. I agree. I worked for HR Block and we were told the basic form is $50 and no more info. If you give your clients value they will stay with you... I hope...

Jlmagana (talk|edits) said:

31 January 2006
I too am just starting out this year. I had my sis call HRB for me. They said their fees start at $85 for a 1040EZ and go up from there. I did a search online - just typed in "tax return preparation fees" into search engine. I got several preparer's websites that had fees listed. Some very general, some in pretty great detail. I am just doing taxes on a part time basis to stay in touch with the tax profession, so I did not want to charge too much. What I did was set starting rates as follows: 1040EZ $55, 1040A $75, and 1040 $90. I am using one of the fee schedules I found on line that had a list per form. I add up the fees per form according to the schedule and if it is less than the minimums I set, I'll charge the min. If it is more, I'll charge the greater price. Most of the returns I will prepare will fall at the minimum level, but if someone has Sch C, E, A, etc., it may be more. In general the schedule was about $30 for more in-depth forms, and $12 for other general forms. Hope this helps.

Beengel (talk|edits) said:

1 February 2006
For those starting out, where are you working--in a rented office or from a home office? Home office, has this been successful for you and how do you prepare clients for this. Renters, how have you managed rental for a few months a year?

GET (talk|edits) said:

1 February 2006
I work out of my home and also uses a virtual office for $20.00/hr on a as needed basis. I use the office to meet client that want to come in and do their taxes.

Inagpurwala (talk|edits) said:

2 February 2006
Hi GET: Which State and City are you on? This hourly rate is very good! I do my business from my home. I just started last year (I do have experience of tax prep of 15 years).

CrowJD (talk|edits) said:

24 January 2007
I'm in Atlanta. Had a guy come in last year who had been using Block, and his total for 1040, & Sched. A plus state was $187.00. I don't remember the breakdown. I charge $208.00 for itemized 1040, $225.00 for Sched. C. If you compete solely on price, you will get clients who leave you time after time to save a few dollars when they find someone cheaper. Sell your service instead, let the client know they can call you during the year, and return their calls. That works wonders.

MsTwizz (talk|edits) said:

12 February 2007
Maybe I should start another thread, but I am curious, what is your turn around time to complete a business tax form (1065, 1120, 1120S)? This is my first season working on business tax forms and they take me FOREVER to complete! :o)

Will (talk|edits) said:

12 February 2007
As little as an hour as long as two days. The pass-through entities can be a cake walk if they are below L and M thresholds. If you are building a balance sheet where there has never been one, ughhh :(

Bottom Line (talk|edits) said:

13 February 2007
Helps too if you've done the bookkeeping work all year. Those usually take me less than one hour. I've done all the research during the year and have most if not all of the info at my fingertips. Then it's just a matter of plugging in the numbers.

Jokadah (talk|edits) said:

13 February 2007
Is anyone else getting clients from Jackson Hewitt? This year so far I have five clients that came from Jackson Hewitt. I ask new clients to bring in a copy of their prior years return. One new client 1040, schedule A and schedule E was charged $438 last year by JH, have their rates gone up? My invoice for same was $375, maybe I should rethink my fees. New client was amazed at the actual interview/conversation I had with him. With JH they use a question driven software that anybody could sit at and operate. They did not offer him any type of advice, I'm confident that those new clients will stay with me because of the service I offer.

Deback (talk|edits) said:

February 13, 2007
I still don't understand $375 (or $438) for a 20-minute tax return. I knew that Jackson-Hewitt charged about three times more than I charge, but I'm amazed that so many other tax preparers are charging this much. I can do three returns with Schs A and E in an hour (for current clients, that is, with one rental property each) and would charge about $150 each. But then I don't have to pay building rent, wages, payroll taxes, or train new preparers for two weeks in the fall, etc...

Rgtaxservice (talk|edits) said:

13 February 2007
Deb - do you charge by the form?

Bottom Line (talk|edits) said:

13 February 2007
Plus Jokadah is in California $$$

Jokadah (talk|edits) said:

13 February 2007
Wow Deback, there is no way I could do three schedule A's and E's in an hour, even if they were existing clients. If an organizer was filled out and all I had to do was input figures, I probably could, maybe. I'm curious, how long do the rest of you take to do returns? How many of you copy client back up information? What about review? I'd be interested in hearing any time saving techniques.

Deback (talk|edits) said:

February 13, 2007
Well, including the normal interruptions (phone calls and clients picking up and dropping off), I'll change it to two A's and E's in an hour for existing clients, if the expenses are listed on a sheet of paper and I don't have to call the clients to get more info. Sch A is normally quick...enter the PT, lic fee, mtg int, and contrib. Sch E is usually quick...enter the rent income, ins, mtg int, PT, repairs, etc. I'm talking about the normal As and Es, not those with several asset additions, employee business expenses, etc, but even those don't take much longer. After 32 years, I've learned how to prepare returns quickly (actually, I learned that about 30 years ago and took typing in high school, so typing 60 wpm also helps. Being valedictorian might help a little, too). Also, I don't deal with organizers, so the time needed to complete a tax return is a lot less than if I was going through several pages of organizers. I go through their documents (int inc statements, mtg int statements, PT bills, etc) and lists (when they are self-employed or have a farm, rental property, employee bus exp, etc).

Jokadah - I keep copies of the W-2s and 1099s (but not the Soc Sec 1099s). I make copies of lists that clients bring in, and I keep copies of brokerage statements for stock sales.

RG - Yes, usually, I charge by the form, by the number of W-2s and 1099s, and sometimes by the number of entries on the form, when a tax form has more than 3 or 4 entries. Sometimes, I charge by time, but my fees by the forms usually correspond to the time spent, unless the client is disorganized. When I'm spending time just preparing returns, with no interruptions and no breaks, it comes out to about $250-$300 per hour. But the constant interruptions brings that down to a lower average per hour, of course, especially on Mondays. Mondays are the busiest for me, especially in February, with phone calls and drop-offs.

Taxworks (talk|edits) said:

13 February 2007
Deback, Fees should be based on value-added, not speed-typing. You can input the data because you are fast, and you know what you are doing. You know your clients, you have the tax returns all set up and ready to go for input. That doesn't make the value of your completed tax return any less. Your clients keep coming back because they trust you. Get paid for how good you are! Anybody can type.

Deback (talk|edits) said:

February 13, 2007
I have to charge the comparable rates for my area. I have an idea of what other preparers are charging and my fees are similar or a little higher than theirs, but I've always been lower than Block and Jackson-Hewitt. As I've said before, I don't have to pay building rent, wages, payroll taxes, etc, like those companies do. Also, a lot of my clients have been my clients for many years, and it would be impossible for me to charge someone $350 for a return that took 15 or 20 minutes while they watched me prepare it. But it's been easier to raise my rates this year a little more than normal, especially since I've had a bunch of 5695s so far (at least two or three a day), and lately, several HSAs to deal with (about one a day in the last week--which are easy now that I know what info I need).

Lizzit (talk|edits) said:

13 February 2007
Speed typing is why I made good money working in a tax chop shop - I could clear 4 EZs an hour, but I mostly did ones with lots of schedules, averaging 1.25 hrs per client - total time. The company charged a set fee per return and per schedule, just like H&R, so the people who dallied made less money that the speedy ones.

Hourly's a bad choice, because you only have so many hours in a day. Set fees are good, because if you work faster you get more money. This incentivises you to clear your plate and bring in new clients; eventually hiring other folks to do the prep for you.

Listen to the folks who say go for value. What do you offer that no one else does? If your main selling point is "cheaper than H&R", and you're operating out of a home office with little overhead, then you'll probably run at a profit, but you'll never get rich. If your main selling point is hand-holding (that's one of mine, BTW), you can charge ten to twenty times what H&R Block would charge and folks will still come back to you. Or think of specializing in one crucial area which there is a lack of knowledge in your local community. I remember back at the tax chop shop, we had a special deal for MBA students that raked in a lot of dough. I now run a package deal for a particular market segment that brings in so many clients I no longer need to advertise. I have three related market segments that I focus on: 98% of my clients fit my market segment profile - the rest are relatives and old buddies from high school days.

After the busy season is over, this summer focus on your marketing plan. If you're looking at a low-income market segment, pick up a copy of streetfighter marketing by Jeff Slutsky; for higher-income markets, pick up The Portable MBA in Marketing. Or read both to figure out which strategy you're better suited for.

Running my own business and choosing a great marketing plan has given me financial freedom. I don't worry about whether I can afford to pay this bill, I just pay them all when they come in. I have money left over to invest, to travel all over the world, and take 10 weeks holiday per year. This is my dream life.

MsTwizz (talk|edits) said:

13 February 2007
Sounds great Lizzit! Gotta get there!

Yes, for the clients where I have to "building the balance sheet" setting up the assets, setting up depreciation, entering their st and lt liabilities, it takes a long time! I'm not sure how to bill this, though...if I bill by the hour, they would be getting a huge bill! How do you guys bill for tasks such as this? (building the balance sheet, checking their chart of accounts to make sure everything is being booked to the correct account....stuff like that) Is that a normal bookkeeping charge? I have a bookkeeping per hour and an accounting per hour. I would bill this under my accounting per hour rate, which, I might add, my rates are TOO LOW after reading this thread. I need to raise them.

Will (talk|edits) said:

13 February 2007
Everything up to the TB that can be directly entered into Lacerte I bill by the hour on. Then it is by the form. Currently $75 an hour and I bring a p/t battle axe bookkeeper in once or twice a week to push these files. $45 an hour off-season. However I am nowhere near having a life like Lizzit describes so do whatever he says! :)

TaxNerd (talk|edits) said:

13 February 2007
I'm probably way too low myself. I'll charge $125 for a client with a simple Schedule C or E or form 2106. They are all repeat clients (haven't taken on new clients in years), so the data is already there, and it usually takes less than 30 minutes, and I never hear from them again the rest of the year (yes, I do it while they wait - I don't play that game with them). I could probably go a lot higher, but I don't mind - it beats my old job of working on the assembly line for General Motors. Like Lizzit, I take lots of time off for vacations and golf (went to Ireland last year). I do have about 100-150 mail in or drop off clients where I can make $300/hr or more, so that helps increase the average, but I'm happy with the $125 guys.

Wkstaxprep (talk|edits) said:

13 February 2007
It took me a number of years, but now, and with excellent mentor advice from fellow EA's i am charging fees based on my service and what i offer. I agree with a preious reply that we should not get paid by how fast we can do a return. One of my beliefs is that a return should be the final product of good year round planning and advice.

For example, if you are in good communicatin with your clients during the year, and your client under otehr circumsatnces would have cashed out his 401k, but you are proactive and show your client he/she can borrow against the 401k and pay themself back without getting creamed in taxes, isn't that really what we should be doing. just one example.

anyway, long term clients who have been with me from the start i only raise modest every year ($25). however, new clients i charge a minimum fee of $250 (i.e. wages, basic schedule a, and schedule b) if they are referrals they are coming to you becasue u were recommedne as a quality professional. out of the 4 prospects i give them the estimate fee upfront and usually keep 3 of the 4 for (that's $750 receivables) as copmpared if u did all 4 for the low fee of $150 (receivables are only $600 and your doing more work) also, i find that the good fee cleitns respect u more when u chareg a good fee(would u wnat your heart suregon who is supposed to be grerat charging you $50 , ? wouldnt u wonder if he is so great why does he charge so little) the higher fee cleients treat u better and understand teh value of having a good tax pro, they realize that in the long run a good tax pro will help maximize their tax savings in a much greater way than tryimn to save a couple hundred bucks on the fee every year.

one last thing, if u do the entire return in front of a client, what r u telling the cleitn > that u just key puchhed really quick, dont put any tax savings thoughts behind return , u just data punch,print , sign and collect the fee, i think it refelcts a bad image. what about discussing with the clietn IRA's , how much r u puting in yoru 401k, is yoru 401k in conservative stocks agressive stocks, etc,. should they opena 529 plan for kids college savings, if they have large debts we cna recomend taxpayer to get a home equity line of credit so that when they pay back that loan at least the interest is deductible, are we discussing the new energy crdits with client, isn;t this really wherew ecan separate oursekves as porfessionals as opposed to just , one two three bang out the retune it took me 15 minutes , i mean it with greta respevct, but lets give ourselves credit for the service we can porvide, in the long run it will be good for our industry.

Taxstudent07 (talk|edits) said:

4 August 2007
Anyone in Texas care to comment?

DZCPA (talk|edits) said:

4 August 2007
All the above applies to you also!!. Except....a little lower fee since no state tax return needed in Texas.

KendraR (talk|edits) said:

9 September 2007
As I new tax preparer (still in school). One thing I have decided is that I am NOT going to charge by the hour. I know that I will be taking extra care with each return checking every little detail. I don't feel it is fair to pass my inexperience on to my customers by charging an hourly fee. I was thinking about (marketing) offering a small discount for a referal. Something to establish some clients. What do you all think about doing something like that? I live in a smaller community in Northern California. I am torn between whether it would be wise to be offering up discounts so early. But on the flip side, I may not get many clients if I don't offer something to be competetive in my area. All comforts aside....What is a good number of returns to prepare your first season?

Sandysea (talk|edits) said:

9 September 2007
Why still not hourly? You can absorb the cost of your research and not charge a client for an hourly rate for time spent "learning about the tax law". You need some basis for your fees. It is too difficult since returns range in complexity to give a flat fee in my opinion.

You can then "write down" the fees due to your inexperience or write them up if you are underpaid for a simple return.

Discounts for referrals is great, but if you aren't charging enough to begin with, then the discount will put you in a more negative situation.

Good number of returns to prepare first season? One is more than none....if you are only self employed and have no other income, then marketing may help. But the first thing I learned from clients is that they don't really care about the savings from a referral fee (bird dog). They care if I did the return correctly, gave them my attention and helped them where they are. I do give a bird dog fee of 10% off annual billings for larger clients for a referral but my referrals are generally from other accountants in my area who are too busy or my current clients who want nothing in return :)

BethAZ (talk|edits) said:

9 September 2007
Have you had a minimum of 2 years preparing tax returns under supervision (working for someone else?) If not, you sure are grabbing a tiger by the tail :)

It's easier to discount than to raise your fees. I agree completely with Sandy. Offer better service than your competitors, not lower prices. Make every client feel like he or she is your only client.

KendraR (talk|edits) said:

9 September 2007
Thanks for the quick replys! I have prepared my personal returns since I was 18. Not much but I have grown from single to married with two kids so I have prepared some different schedules with my 1040's in the past few years. No, I have not had experiance working for someone else. But, California is one of two states that requires you to be licensed and bonded to prepare returns. I'm just not comfortable charging an hourly fee because I feel I will be too slow checking everything over! I think I will have a base range for each type of 1040 so that I can adjust my fee based on the difficulty of the return. This will be my home business but it's not my only source of income so I feel I can take care in building good relationships with my customers and I don't have to worry so much about makeing a ton of money right away. I'm starting my business because it's something that I enjoy doing and I can make money at it!

Sandysea (talk|edits) said:

9 September 2007
Then my advice, simple as it may be....if you are licensed and bonded, then I would begin by doing family/friends returns...simple 1040's with schedules. You should have no trouble with most of them unless there are situations which rise up (Schedule C, Schedule E, Schedule F, trusts, etc.) and you will then get your feet wet.

If you only want to do 1040's, then you can decide on a flat rate I suppose. This would require minimal research, bookkeeping and the like.

Good luck making the move!!

Taxman7 (talk|edits) said:

September 9, 2007
about 4 or 5 years ago, I realized that H&R was getting too far ahead of my rates, I was gaining new clients because I was 'cheaper' than Block, I began a process of rate increases to become more 'comparatively priced', I gain about 10% new clients each year, and as far as I know haven't lost any due to increases, so I'll continue the rate increases until I start losing clients due to rates, something I'm looking forward to, because then I'll know my rates are in the right range,,,, if you don't increase at least 5% average per year, you're getting behind the inflation rate, just some of my thoughts,

p.s and like DZ said last year,,,,, Something to think about "Double your fees and half of your clients will leave. You will make the same amount of money and work half as much as the year before" I like that idea about mid-February

JR1 (talk|edits) said:

September 10, 2007
Do NOT charge hourly rates. The reason? You'll earn far MORE on a schedule-type structure. You don't even want to know what my real hourly is doing tax returns. It's 4-6 times my real hourly rate. Granted, I've been doing this a long time, but can do a return in 15-20 minutes, and generally charge twice my hourly for the average return. No plan, just works out that way right now. H&R is NOT your competition, no matter how bad you may be, unless you want to just churn and burn the public. Provide good service, answer your phone and emails, be there when they get notices in June, and they'll appreciate the value you bring for your fees.

Dotsok (talk|edits) said:

12 September 2007
I was reading some of your discussions that are posted they are very helpful. I have been doing taxes for 4 years out of a small office behind my house outside of Fresno, Ca. I am in the process of writing a business plan and have been trying to get information on the fee structures for H&R Block, Hewitt Jackson and Liberty. Of course when I call them all I get is they would have to see my info and input everything to get me a cost. They wont tell me the cost of a 1040 with a simple sch C. Can any of you give me some general $ figures or suggestions on where I can get the info. I live in a small town with 1 CPA and 4 CTEC tax prepayers no franchises. I'm hoping to open my office next month if I can get my BP done and get the financing.

TheTinCook (talk|edits) said:

12 September 2007
Well, the folks at HR Block gave you the right answer, at least. There is a fee estimator on their software, but it's often off the mark. So you never want to quote a firm price, or even a soft one, and then have an unpleasent surprise when it's time to present the bill

The problem with requesting a estimate, even for "a 1040 w/ Sch C" is that there is a lot of added costs depending on the forms needed to file, the amounts on the forms, and other details. There are charges for EVERYTHING. My fav is the hourly charge we could add for the shoebox/PITA clients. I don't think I can go into anymore detail. Even if I could, the info could be of limited use to you since we are in different markets.

Just one point of comparison, the preperers for HR Block generally earn 13-20% of fees they generate for the firm.

Besided, you really shouldn't be pricing to the chain stores. Odds are you can offer better services and credentials, otherwise you'd probally be working for 'em.

Dotsok (talk|edits) said:

12 September 2007
Thanks, TheTinCook, this info does help because I can use it in explaining why it is so difficut to get an answer from the chain stores. I'm not pricing to the chain stores because yes I do have much better services and credentials. Plus I offer more services than they do, like bookkeeping, doc generation, coping, notary, mailings and unlike the chains and my local comp (except the CPA) I do the ITIN's and being a certifed acceptance agent I don't have to send them to the IRS (with the wrong paperwork). One of my biggest problems is I don't speak spanish. This is one of the the benifits of expanding. I have a couple young ladies that are wanting to become prepayers and work with me, both well kown and respected in the community. They will be a great asset to all asspects of my business.

But not having a lot of comp in the local area I have to list the chains.

TAXi driver (talk|edits) said:

12 September 2007
My fav is the hourly charge we could add for the shoebox/PITA clients.

I'm totally new, but I'm hearing horror stories here about several farmers with grocery sacks of reciepts.

Fuzzy Faced Leader (talk|edits) said:

12 September 2007
I'm a CPA, over 25 years preparing tax returns. I am comfortable charging my hourly rate, because some of my clients think I'm too expensive, and some think I don't charge enough. When getting new clients, I look at the amount charged last year. This will give you a ballpark of what others are charging. You can also call up other local profesionals, and ask what their hourly rate is. Prospective clients do this all the time. The problem of using a per form charge is that some Schedule C's take a lot longer than others. But this billing system is usually built into professional tax software, and is easier to bill. I also will increase, or decrease my fee, depending on circumstances, such as PITA customers, or excessive research time for long-time customers. I hope this helps

Donniecastleman (talk|edits) said:

12 September 2007
PITA???? As in Pain In The A$$? I brought that term to the tax office where I worked last tax season part time and we've had a ball because we can say it without too many people knowing what it means, maybe I'm fooling myself!

On a serious note, I charge by the form because I work efficiently and with most of my clients doing advance preparation, can knock out most returns within an hour or so.

Will (talk|edits) said:

12 September 2007
I have begun charging by the form or the hour whichever is higher...

JR1 (talk|edits) said:

September 12, 2007
Hourly might be ok if you're REALLY slow....but you need to be thinking of value provided, which has nothing to do with hourly rates. Value value value....it's the tapping on the carb thing. Don't charge for the time of tapping. Charge for what a working carb is worth.

Will (talk|edits) said:

12 September 2007
I have a hard time estimating how much time an 1120-S is going to take. Some that seem simple take much longer than they should due to accounting irregularities and the usual. My min 1120-S is $500, my largest this year has been $2500. It is such a wide range and I don't have enough experience to tell at first glance. The hourly component covers my ass.

Dotsok (talk|edits) said:

12 September 2007
What are any of you using as a base price for any of this whether it be hourly, per form, PITA, shoebox, brown paperbag, box or simple return. I know prices vary by state, experience and certs but there has to be some base to begin with. I may be in CA, but I'm also in the central valley in a low income farming area. Many of my clients make less then 20k with both working or family business (Taco trucks seem to be good income). How do I charge these people higher rates yet stay comp.

KendraR (talk|edits) said:

13 September 2007
I was thinking of requiring a deposit of some sort before I complete a tax return. Does anyone else do that? I was just thinking that a deposit would cover my time if I get started on a return and then a client leaves for one reason or another.....How do you charge in general? Pay up front, pay as you go, pay after the return is complete, ect????

TheTinCook (talk|edits) said:

13 September 2007
At HR Block, the policy was that the client could decide to walk at any point until e-filing or handover of the paper return if mail-in, and would not need to pay at all. We had a few refund shoppers and a couple of people who waited till Apr 15 to pay. I'd call it pay-at-filing.

If you can get a retainer go for it, especially if you have clients with tax problems.

BethAZ (talk|edits) said:

13 September 2007
As a rule, I usually require payment from clients when they pick up the tax return. Some out of state clients are asked to mail their payment with forms 8879. Tax returns that require a lot of bookkeeping work to ascertain Sch C, require a retainer for a minimum of the bookkeeping fee involved, balance due upon receipt of the tax return. Long time clients with a good payment history simply have the invoice included with their copies and pay at their convenience. Corporate clients are invoiced through the mail and have always paid me within 30 days. I give an estimate of fees before I begin work so the client isn't surprised by the fee, and I'm not surprised by nonpayment. All of that has been determined and agreed-upon before I've done any billable work.

Every year, I go through my records and kick a few clients loose. Top of the list are nonpayers, next are slow payers, next are the hopelessly disorganized and chronic procrastinators. High maintenance, slow payers take up a lot of resources.

KendraR (talk|edits) said:

18 September 2007
Ok, I have figured out my base prices! I think I have done a good job at placing myself in the middle. I don't want to be the cheapest out there and end up with all the scammers! Guess I will wait and see how it goes. When I get my software I will add prices for filing if needed. I have also included an hourly stipulation for people who are unorganized or have excessive entries. Anyway, for an ez it's $40-70 for 1040A it's $60-125 and for 1040 it's $80 and up. My low prices are basically there to look good. I know if people see a lower price they think wow that's a good price! I don't expect anyone to pay only $80 for a 1040. It cost me darn near that much for Turbo Tax and I have been using them for the last 7 years! I have a friend who pays the block $120 for an EZ! She said they only pay that much because they have been going to the same lady for so long.

LJACPA (talk|edits) said:

18 September 2007
Wow! You're in CA (where?) and you're going to bill this low??? I thought I was really cheap, but even I wouldn't do a 1040 for less than $175 (that's my base fee for a simple, simple, simple return), and that IS cheap! Why in the world do you think you have to go this low?

TheTinCook (talk|edits) said:

18 September 2007
Kendra, your prices are cheaper then HR Block's. If this is your first year in practice, you may want to work for somebody rather then putting out your own shingle. It's tough enough hustling new clients in a large market like Los Angeles.

If you don't mind sharing, what school are you going to?

KendraR (talk|edits) said:

18 September 2007
I'm in Northern California....3 hours north of San Fran. I am taking my course online through The Income Tax School. I'm going to have a home office. I have a 3 and a 6 year old. My 6 year old is special needs and plain and simple I don't have time to work for someone else. It is tough enough to have my own schedule let alone being told when and where to go to work! I'm not planning on surviving on my tax prep income...just plan on making a few extra $$$. I'm sure I will change my prices next season....maybe even mid season. But, to start I think I have my prices pretty reasonable for my area. I'll have to see what people were charged last year to be certain.

Taxman7 (talk|edits) said:

September 19, 2007
Kendra, be careful when guoting prices, especially over the phone, potential clients don't understand all that's involved with preparing a return, I had one that said "all I have is a short form", then when they came in , yes they didn't itemize , but they had 20 stock sales to report, from experience, you can discount a lot easier than you can increase, e.g. if your minimum 1040 is $100, it is a lot easier to go down to $80, than to go up to $100,,,, in the mind of a client, $80 and up means , hey he doing some clients for $80, why do he charge me $125,, I'm just a ramblin' man, Tryin' to make a livin' and doin' the best I can,,, good luck with your new business,

Davidson (talk|edits) said:

19 September 2007
I've seen a lot of discussion about what Block charges. Just a couple of comments based on my having worked there as a manager for a few years.

1. Each franchise owner or office sets their own fee structure. I believe the corporate office issues guidelines depending on the geographic location. That is why you may find such different fees from one city to the next.

2. Preparers are generally allowed to give estimates but the company prefers a standard response to the question like "Our fees generall start at $xx for the federal return. The state return is $xx extra. Fees are based on the complexity of the return so the more forms we complete the higher the preparation fee." This helps ward off the hundreds or thousands of local preparers who are trying to call each year trying to get a benchmark for setting their own fees.

3. Block and Jackson-Hewitt (probably other national chains as well) adjust their fees throughout the course of the season. This means that a taxpayer who comes in during peak season (end of January to mid-February) might pay slightly more than a taxpayer who comes in during the slow time in mid-March. They are also more likely to pay higher fees for RALs and other additional services (like e-file fees where they are used).

4. Block has diffferent fee structures for different offices. A premium office more closely resembles a CPA's office for more upscale clients. There is less rush to move people through the desks and they are staffed with a better quality preparer - EAs and senior tax advisors for example. Premium offices typically charge more than budget offices - offices based on the retail model and catering to lower income clients who claim lots of EIC and use lots of bank products. Some of these premium offices may also offer bookkeeping or other accounting services for clients with small businesses, etc.

5. The entire fee structure is kept in the main server at each Block location. This server is available for remote access by Block corporate offices so that, in theory at least, the corporate office could automatically change the entire fee structure for all offices across the country at once. They do make adjustments from time to time. Usually this is done during key seasonal changes (like at the end of peak, for example) but conceivably be done on a daily basis.

6. The fee structure is considered proprietary trade secret. No one is supposed to be able to hand someone a fee structure if they ask for it. When we got questions about a "price list" we were supposed to tell people it was confidential information but that I could give them a rough estimate.

7. A comprehensive list can be printed from the server if the user account accessing the list has management rights. This is especially helpful for a disgruntled manager who wants to take the list when they leave to start their own office. I'm not naming names or anything .... :)

Hopefully that clears up a few misconceptions about Block's fee structure and why it's so hard to pin down.

Having said all that ... don't worry about what Block is doing. You can't ever really compete successfully on price ... and I don't think you should sell yourself short that way. There will always be companies like Block and Wal-Mart who tout their low prices. And there will be clients who continue to use them no matter how low your prices are or how bad their service is. Besides, do you want to try to build a business made up of customers with little brand loyalty who are looking for the lowest prices and willing to jump ship the moment they find a better deal? Put a value on your hard work and education ... and your unique set of skills.

To be competitive in this business, you have to figure out what the big companies are doing badly and figure out how to do it better. It may be customer service, your marketing, the fact that all your customers see you as an authority on a particular topic. Find out what value you bring to the table. There are lots of tax preparers out there. Stand out, provide something extra, and don't be afraid to charge appropriate for your time and effort.

While it may be useful to compare fees with other preparers, don't let it guide your decisions entirely. The preparer who charges discount rates may be out of business tomorrow. They one that charges more than you are comfortable asking may be around a lot longer and may, in the process, build a client base of people who will never leave until they die. (And then they're doing the estate tax returns, too!)

Customers will pay you what you are worth. Provide more value and you will be able to charge more. Figure out how to provide that value without adding additional overhead or workload and you will become successful.

Just my thoughts ...

JimS ME (talk|edits) said:

20 September 2007
There's a lot to be said for per-form charges. As JR1 put it...you can earn several times your regular hourly rate on a per-form basis once you've got your systems up and running.

However, you need to keep in mind that certain forms need adjusting depending on the complexity of the taxpayer. We routinely adjust Schedule C between $50 and $100 depending on the number of lines that need to be entered, plus charge an hourly rate for any bookkeeping/summarization. The fee is simply for filling in the form.

You should also bill for any other extra research (one example we bill for is stock basis tracking) on an hourly basis. Basically anything outside putting numbers into the tax return is an additional fee.

GeoEA1065 (talk|edits) said:

20 September 2007
In my part of the world Block is not that cheap. And it is pretty easy to compete on price. And, instead of getting a new preparer each year they get someone they know and can talk to all year long. I have gotten a lot of Ex Block clients over the years by giving better quality service for a better price. Always a good business strategy. What Block has is name recognition, like McDonalds, but not necessarily customer satisfaction. Same with JH. I charge by the form, charge more for extra line items, discount for good record keeping. I base my rates on industry averages for my region. I have worked at enough large retail firms as well as CPA firms to know about what is being charged. Plus new clients always have a "horror" story to tell of how much Block or someone else charged them last year.

Johnhuddleston (talk|edits) said:

1 December 2007
"3. Block and Jackson-Hewitt (probably other national chains as well) adjust their fees throughout the course of the season. This means that a taxpayer who comes in during peak season (end of January to mid-February) might pay slightly more than a taxpayer who comes in during the slow time in mid-March. They are also more likely to pay higher fees for RALs and other additional services (like e-file fees where they are used). "

That's brilliant. But I didn't know mid-March was slow. I guess my clients are. Good info Davidson.

John Huddleston

Bottom Line (talk|edits) said:

1 December 2007
March is slow for them because they have a very different client base than we do. A large portion of their clients are getting large refunds due to EIC and they want refund anticipation loans so they can buy their fancy new TV's NOW!!

Jdugancpa (talk|edits) said:

1 December 2007
Before Christmas even? Those are early filers!

KendraR (talk|edits) said:

1 December 2007
Just an update. I also want to thank everyone for your input because it has helped me a ton! I have changed my price sheet to reflect a minimum and a maximum price. But, I have also added that I will charge an hourly fee for organization. I have also made sure to include that my prices are subject to change without notice. I also charge extra to e-file. I do not know how much I will charge to e-file until I get my software and see how much it will actually cost me.

Johnhuddleston (talk|edits) said:

1 December 2007
Lacerte, which charges a little extra for everything, charges $2 for efile.

John Huddleston

Actionbsns (talk|edits) said:

1 December 2007
John, I read that little excerpt without realizing that's what it was and immediately thought "There's a slow season in March? How does that happen?" Then I read your comment. You sure couldn't tell that there is a slow season in March when you are reading TA at that time, posts are flying in fast and furious then.

Johnhuddleston (talk|edits) said:

1 December 2007
I guess EIC returns don't create many interesting issues.

John Huddleston

Mdwtax (talk|edits) said:

3 December 2007
I bought a tax practice this past summer, and in reviewing the files for fees charged, planning opportunities, etc., I noticed that an overwhelming majority of the clients did not use or return the client organizer that the previous preparer sent out. I know that's a common problem, my question is - do you automatically tack on a bookkeeping fee for clients that drop off information this way, or just let them know that it will slow down the turn-around time and move them down on the priority list to finish the 'prepared' clients first?

Johnhuddleston (talk|edits) said:

3 December 2007
I charge hourly. This is one more reason why. So I don't have a separate charge when they fail to complete the organizer.

John Huddleston

KendraR (talk|edits) said:

4 December 2007
I will charge by the form for tax preparation. Book keeping, excessive entries, and the unorganized are charged by the hour. I am also going to require a deposit as well. I will have to see how this works!

Johnhuddleston (talk|edits) said:

4 December 2007
Mark W, What was the cost of the practice purchase compared to prior year revenues (%age)? Or is it based on future revenues?

John Huddleston

Mdwtax (talk|edits) said:

4 December 2007
I bought it for 1x the previous year's revenue. On that point, I guess it was good for me that the seller has probably been under-charging clients for a few years. I've been working on my engagement letter this morning and am including a bookkeeping charge of $50/hr for those that come in unorganized, with a minimum charge of $50 on that service. That will be something new for the clients, so I'll see how the response is, then decide on requiring deposits next year.

94nole (talk|edits) said:

4 December 2007
I charge only an hourly rate. Last year it was $125 per hour. This year my bill rate is $137.50. I usually spend between 2-3 hours on a return and will discount the fee if the TP is especially prepared and organized. If they come in and are totally disorganized, I remind them of the language in my engagement letter re: billing at standard hourly rates for accounting services and let them make the decision.

In my opinion, professional services should be value billed. Tax return preparation shouldn't be a transaction fee. How many times do you take calls during the year that you don't bill for? The value is in a year long relationship. Hopefully, many years.

I realize that there are many who chose to work in the tax business because they may have retired from their primary career and want to do something, most of the work is done during the worst weather months of the year and can be done from a home office. However, the hobby rates that many charge should be reconsidered based on the value you bring to that client.

I had a client call two days ago about establishing an HSA and maxing out on a Roth conversion without going into the next tax bracket. I answered his questions, and will not likely bill for it now, but you can bet I will value bill for my time in a couple of months.

My kids like to eat just as much as my client likes to save money. Probably a little more if it's been a couple of days since they've eaten. I'M JUST KIDDING!!!

Johnhuddleston (talk|edits) said:

4 December 2007
Thanks Mark,

John Huddleston

Southparkcpa (talk|edits) said:

5 December 2007
I agree with 94nole quite a bit. I , as a CPA have a small boutique practice and we do about 300 personals and 120 businesses with 2 CPA's, one office person and an intern in Feb and March. Our minimum 1040 fee is $400 going to $500 this year and the minimum biz is $850 going to $1000 this year. Returns with a C, D E or other complexities get additional fees. Average 1040 is around $600

I do NOT charge for telepohne calls, fast E mails etc.... and I market the firm as a year round financial coach. So in theory I sell it as a year round fee.

For clients who invest with us (I am a CFP), I have discounts like free IRS response letters, free audits if in house etc...

the fees are not for everyone and when we get calls, we tell them our minimum and 2/3 of people hang up. It is the best way I could think of to build a quality practice.

Just another country heard fom.

Threefeet (talk|edits) said:

5 December 2007
I have read a lot of discussions on this page and am finding that fees differ in different parts of the country. I am in Florida, I am an EA and in my 2nd year of owning my own business. I work at home and have an 11 year old and 6 year old. I quoted last year $25 for bookkeeping and $50 hr for tax. From what I have read, I think I will raise my fees a little. I became an EA last year but have been in the tax & bookkeeping(for CPAs) business for over 20 years. I have busted my butt in education this year to try and learn everything I could, but sometimes I feel like I don't know enough.

My first year I prepared about (10) 1120S and (50) 1040s. I was pretty surprised I prepared that many!

I just don't want to outprice myself and am worried that sometimes I do.

Bottom Line (talk|edits) said:

5 December 2007
Tammy, I'm in FL (Tampa area). I believe you're shortchanging yourself. I charge $40-$50/hr for bookkeeping. I don't bill my tax work by the hour but your $50 seems very low especially when you've got the EA credential (even though your clients probably don't know what that means). We all feel that we don't know enough which is one of the reasons why we come here. As someone (I unfortunately can't remember who) said a few months ago - what would happen if you doubled your prices? Answer - I'd lose 1/2 my clients. That means you're doing 1/2 the work for the same amount of money. I like that and am trying to incorporate it in my practice.

Johnhuddleston (talk|edits) said:

5 December 2007
Unless you are McDonalds large, it's best to sell your quality rather than your price. Some people wouldn't hire you because you don't charge enough.

John Huddleston

RJM (talk|edits) said:

5 December 2007
I also charge hourly, for write-up and tax in a solo shop. Am trying to get $120 per hour this year (in WI). Also provide year-round tax planning along with return prep. I think we should be selling our expertise, our brains, which makes most sense to charge on an hourly basis. By not having a fixed price per form, I weed out the small boring price-sensitive returns. A client's tax fee goes up or down depending on how complex it was and how much time it took to complete the return.

What do I know about taxes? None of us knows everything about the tax code and regs, but we are the ones who know WHEN to research an issue and we know exactly where to look to find the answer. We don't need to know it all, we just need to know how to quickly find the answer to any given tax issue.

Johnhuddleston (talk|edits) said:

5 December 2007
The thing I hate about this job is that too often the answer is maybe.

John huddleston

Clr600 (talk|edits) said:

December 5, 2007
Check this H & R site out. You can estimate your costs to do you taxes at H & R.ttp://www.hrblock.com/taxes/doing_my_taxes/price_estimator.html

Clr600 (talk|edits) said:

December 5, 2007
Wrong link try this one.

www.hrblock.com/taxes/doing_my_taxes/price_estimator.html

Kevinh5 (talk|edits) said:

5 December 2007
Suggest everyone BOOKMARK THIS PAGE for that useful link. Thank You, Clr600!

94nole (talk|edits) said:

5 December 2007
I agree it is interesting but for 3 years, I had a storefront in the same shopping center as HRB and I can guarantee you that they never did a 1040 with Schedules A and E for $170, which is the number I got when "estimating" such a return. And I sold that practice more than 4 years ago.

So, based on my experience with the "beast", this is just more bait and switch that they employ so well. This is a comment towards HRB and not anyone here who may have or still works for them.

94nole (talk|edits) said:

5 December 2007
Threefeet,

If some aren't walking, you aren't charging enough. So, don't worry about pricing yourself out of the market.

Like Southparkcpa said, it allows him to maintain a certain level client. But you have to then deliver for them.

The bargainhunters, i.e., the ones you charge the least, command the most of your time because they are always looking for something for nothing.

Hey, Southparkcpa, I guess your handle means you are in Charlotte? Man, I love that city. Lived in Matthews '94-'98.

Mdwtax (talk|edits) said:

6 December 2007
Thank you all for your input. It has been very helpful. I will print off this thread and began implementing changes for my practice in stages. I am in the midwest, and completely understand what is being said here about the kind of clients you want to hang onto, etc. I'm a little concerned about pricing myself out in this first year, partially because I need a minimum of 70% retention of the seller's clients for me to be able to pay him off. We've only heard good things about his retirement and selling the business to me, so we are hoping for closer to 90% retention, but I'm using the 70% for budgeting.

Since the seller has offered his consulting services for the next year, I sent him a draft of the engagement letter to proofread. My engagement letter mentions the possibility of a bookkeeping fee being added for those that bring me extra work to be completed prior to being able to start on their tax return (is that the politically correct way to say that?). Apparently, he had not ever sent out an engagement letter or charged them for extra work. He thinks they are mostly scared of taxes and filling out forms (organizer) in general. In fact, he estimates that 60% of his clients never used the organizer. He's a nice, retired guy, but seems to me that he held their hand too much, almost relieving them of any responsibility. My question is - since the bookkeeping fee would probably only apply to a minority of the client list, should I take out the mention of the possibility of extra fees and only make individual contact to those that it does apply to (in writing), or leave it in the letter and try to re-word so as not to scare off too many?

Ahwang (talk|edits) said:

26 December 2007
I am putting together a benchmark report on fees and pricing for different industries, one of which is accounting. Are there any specific questions you would like answered when it comes to your industry?

For example:

What are the regional differences in pricing and fees? Do large firms charge more than small firms? The other way around? Do you offer discount? If so when? Are firms with higher fees growing faster than firms with lower fees? What do firms with the highest fees do differently than those with average and lower fees? Do national forms with national clients generate higher fees than regional or local players? Do firms with set service packages and specialties generate higher fees than generalist? How do firms go about raising fees? What have firms learned about fees? Are fees going up? If so, how fast? How many offer fixed fee, time and materials, and contingency fees? Of these firms, are any of them faster growing or more profitable than the others? What are your competitors charging for services similar to yours? How do they go about pricing projects?

Belle (talk|edits) said:

26 December 2007
Somewhere (?) I have an excel spread sheet of HRBlock prices by form that I've used in the past to justify my fee to clients (right before I fire them, if they are really complaining). If anyone's interested, I'll find it - it's at least two years old but still interesting.

Bottom Line (talk|edits) said:

27 December 2007
Wow. That would be interesting.

DZCPA (talk|edits) said:

27 December 2007
Ahwang, All of your questions were good. Good luck getting answers.

Threefeet (talk|edits) said:

27 December 2007
Thanks Bottom Line & 94nole for the input. But, sorry 94nole I have to say GO GATORS! Anyway, I think I am raising my prices a little. Yes, last year I checked on H&R Block and they charged more than I did and I know for a fact that I have MANY more years of education than they do. I will raise my prices but I still want to be here for the small businesses that can't afford really high prices that they charge around here.

DZCPA (talk|edits) said:

27 December 2007
Charge more than H & R. You are worth it.

CrowJD (talk|edits) said:

27 December 2007
Ahwang, I think if you are serving the middle class, as I am, you can make some pretty good predicitons without collecting all that data. What percentage of gross income is the house payment now? 1/3 of gross? Net? Used to be a rule of thumb of 25% of gross, wasn't it? That tells me something. Gasoline is not going to go down substantially anytime soon, maybe never. Credit cards have been making up the difference for years. Now with a rising default rate on credit cards, and a tight credit market (meaning the credit card companies will tighten standards?), I think there will be a lot of resistance to any price increase. Not that they will go to a cheaper preparer, they may just choose a cheaper software package and DIY. I am certainly not saying that we should charge what Block does, but I'm not raising my fees this year.

JAD (talk|edits) said:

27 December 2007
Ahwang, Cal Society of CPAs does a survey - they call it the MAP survey. I couldn't find a link online, but that could be because of my own search skills. It has tons of information.

Donniecastleman (talk|edits) said:

27 December 2007
http://pcps.aicpa.org/Resources/National+MAP+Survey/

there's the link, though it's only available to members and CPA's so it's not too useful on this forum, people that are members already know about it.

CrowJD (talk|edits) said:

31 March 2008
I have come to some conclusions about fees for personal returns. The less well to do subsidize the more well to do. That does not seem like a good business model. So, it would make sense to charge by the hour. BUT...

CrowJD (talk|edits) said:

31 March 2008
Then too, your research material overhead is geared toward the most difficult return you do, which perversely is your lowest profit personal return. Again, a bad model.

Kokomo (talk|edits) said:

20 April 2008
I agree with CrowJD. I would also argue that the simple returns are the most profitable because I can easily give them to a junior tax preparer without worrying about mistakes. The complex ones require my intervention and thus reduces the profit per tax season hour of my time.

Taxgeek (talk|edits) said:

23 April 2008
I see a lot of discussion about HRB and JH fees. Does anyone know anything about the fees charged by Mo Money Taxes? They have gotten pretty big in the southeast, especially Memphis which is where they started and where I happen to be located. They seem to market more towards the low to lower middle income filer.

Yarivelez (talk|edits) said:

16 December 2008
Can someone provide an update of the current charges for non-CPAs in Florida?

Florida Tax Professionals 1040 Return 1120 Return 1120S Return 1065 Return Thanks

Kevinh5 (talk|edits) said:

16 December 2008
Yar, NATP published it's Survey of Fees this October. If you are a member, I believe it is on their website. If not, why not?

Kevinh5 (talk|edits) said:

18 December 2008
a printed copy may be purchased for $10 plus postage (item 2899)

Babyslilian (talk|edits) said:

18 June 2009
I am a member of Natp and the benefits are great, similar questions to this are at our tips of our hands, I encourage you to become a memeber is well worth it

Taxoasis (talk|edits) said:

26 April 2011
I would like to know how much tax professionals are charging for the 3115 form.

Dealsam1 (talk|edits) said:

28 April 2011
I charged my client $140 for the form. It was pretty straight forward as it was just catching up on depreciation not taken on her rental property since 2005. I live in Alabama, so fee structure is pretty low.


Ncscpa (talk|edits) said:

17 April 2012
Some of Clients have 25 1099 Misc and 2 sch k-1 and Sc c with income over 700000. I am wondering how base the service fees since I spent too much time to get all this things together. Also for 1065 - 1120S, How is the fair price to start with. I just like to be fair and comparative. I was looking for a system to charge my clients.

Thanks

CathysTaxes (talk|edits) said:

17 April 2012
NCS, all of the various software applications I've used allow for billing by W2, 1099s, number of assets, number of stocks, number of K1s, etc, so when you get hit with a client who has many of them, you can charge accordingly.

Fletch (talk|edits) said:

17 April 2012
Nscpa: what's your hourly rate? How many hours did you spend on it? If, instead, you're asking the market rate in your area, call around to shops comparable to yours.

MRTAXPRO (talk|edits) said:

25 April 2012
NATP published a fee schedule in around 2009 that I found t/b very helpful. It gives several scenarios, broken out by location, credentials, forms etc.

Fort Wayne CPA (talk|edits) said:

25 April 2012
Is there a way to get a copy of what NATP put out?

Mike Sylvester

Ncscpa (talk|edits) said:

16 April 2013
Hi All,

I have this Doctor client with Income of $ 1.1 Million dollar income and over 30 1099-Misc. How much I should charge him, it took me almost 10 hours work on his taxes with a lot of schedules, deductions. I would like to know based on what we set our fees ? Thanks

Kokomo (talk|edits) said:

17 April 2013
NCS, I would say $1500-$2500 depending on some factors such as

1)which area of the country you serve 2)your perceived value to the client - eg. if you work out of home or in a more professional setting 3)the level of service you provide - are you a "Nordstrams" or a "Wal-Mart"? 4)if you believe in "cost-based" pricing (~$150-$250 per hr) or "value-based" pricing (some real, some perception). 5)How much pain the client causes - eg. how organized they are, how many back and forth communications, how demanding they are 6)Their ability to pay 7)Amount of absolute $s we are talking about. eg. if the $ numbers you are dealing with are much higher you need to charge more because you have to triple check your work, the penalties you will pay for incorrect work is very high (E&O insurance rates will be a function of the claims)

To give you some real examples from my business that is pertinent to your case, I am in Northern CA, and for clients with several K1s, Sch A, D and E (no 1099 MISC), I charge $1000-$2000. I charge $50 per 1099 MISC but would give a volume discount. For your case, I would charge ~$2500-$3000.

Kokomo (talk|edits) said:

17 April 2013
NCS, I would say $1500-$2500 depending on some factors such as

1)which area of the country you serve 2)your perceived value to the client - eg. if you work out of home or in a more professional setting 3)the level of service you provide - are you a "Nordstrams" or a "Wal-Mart"? 4)if you believe in "cost-based" pricing (~$150-$250 per hr) or "value-based" pricing (some real, some perception). 5)How much pain the client causes - eg. how organized they are, how many back and forth communications, how demanding they are 6)Their ability to pay 7)Amount of absolute $s we are talking about. eg. if the $ numbers you are dealing with are much higher you need to charge more because you have to triple check your work, the penalties you will pay for incorrect work is very high (E&O insurance rates will be a function of the claims)

To give you some real examples from my business that is pertinent to your case, for my wealthy clients with several K1s, Sch A, D and E (no 1099 MISC), who demands a higher level of service, I charge $1000-$2000. I charge $50 per 1099 MISC but would give a volume discount. For your case, I would charge ~$2500-$3000.

Taxaway (talk|edits) said:

17 April 2013
Does it matter how many 1099-Misc he gets? Do you list each one?

If you do, why?

CathysTaxes (talk|edits) said:

17 April 2013
I started charging per 1099-Misc when one client had ten of them. The two questions on the business forms, 1) did you pay someone more than $600, 2) are you or did you 1099 them, I believe has caused an increase in the 1099's issued. So now I charge per 1099. I don't charge $50 though.

NCS, I usually base my fees on forms and schedules. If one takes a lot longer to fill out (ie: determining cost basis for 1099-B items), then I charge hourly. If the client ties up my time with a lot of dumb questions (ie: how long is this going to take, how much are you going to charge me), then that time is included as well.

Kokomo (talk|edits) said:

18 April 2013
I wanted to clarify my charges on the 1099 MISC. When I mentioned $50, I was talking about the cost to create a 1099 MISC. Entering 1099 MISC into a tax return would be a lot less. I don't have a $ value but would say it's on the order of $10 per 1099 MISC.

Fsteincpa (talk|edits) said:

18 April 2013
I still don't understand why people are entering individual 1099-Misc for a Schedule C client where the total is included in total income.

No need to.

Deback (talk|edits) said:

April 18, 2013
Fred -

I've been entering the 1099-MISC info (for the last two or three years) after one of my clients received notices (or bills, can't remember) in two different summers from the IRS for two different years, asking if income from certain 1099-MISC forms were included in his income on his Schedule C. I don't remember the notice number or the exact wording, but I figured I needed to start entering the FEINs, company names, and amounts on the 1099 worksheets. I've received no more IRS notices or bills since then for any of my clients.

Fsteincpa (talk|edits) said:

18 April 2013
That's all fine, but I do not believe the IRS matches individual 1099's within total income.

The reason your client received a notice is that they are claiming simply what they get on 1099's. My clients have other jobs they do where they don't receive 1099's. I also tell them that the government knows most people earn more than just what's on the 1099. If you want a flag, I feel that is one right there.

I do have one client who simply subcontracts for one company, they have timing differences occasionally. We always can provide a reconciliation if needed, so we don't worry.

In your situation, was total income reported less than the sum of the 1099's received?

Kokomo (talk|edits) said:

19 April 2013
Fred, I agree with you and actually do not enter 1099 MISC individually. In fact, that is why I don't have a price for that. I have one abnormal client who insists that I enter each 1099 MISC item (he has over 20 of them) and is willing to pay for it. I think he is an OCD case but, of course, I have not asked him that.

Tax Writer (talk|edits) said:

19 April 2013
That's all fine, but I do not believe the IRS matches individual 1099's within total income.

Not yet, they don't, but they are working on using the 1099-K for information matching purposes.

Fsteincpa (talk|edits) said:

19 April 2013
1099-k is not 1099-Misc.

Deback (talk|edits) said:

April 21, 2013
Fred,

I pulled the client's file and discovered why the client received two CP2000 letters from the IRS (for 2007 and 2009). The client is an auto purchaser (at auto auctions) for car companies (self-employed used car purchasing agent is the actual title). Some of the car companies entered his purchasing fees in box 3 on the 1099s. I had "auto sales" listed as the type of work on Schedule C. Therefore, the IRS thought he sold cars and was receiving auto incentive payments, especially for those 1099 forms in which the amounts had been entered on line 3 as other income (and were not reported on line 21). I didn't realize all of this for the 2007 letter, so I explained in a letter to the IRS that the amounts should have been entered in box 7. But for the 2009 letter, I finally realized his job title was wrong on the Schedule C, so I explained that to the IRS and also explained that the amounts in box 3 should have been entered in box 7.

Anyway, due to my bad memory of this particular client's troubles with the IRS, since my last letter to the IRS in May 2011, I've been entering all clients' 1099-MISC information into the 1099 worksheets during the last two tax seasons. I'm not sure what I'll do next tax season, but I might quit doing that -- except when the amount was incorrectly entered in box 3 on the 1099-MISC form. I believe that would be a good time to enter the info in the 1099 worksheet to show the IRS that the amount was reported on Schedule C, even though it was incorrectly reported in box 3 as other income.

Fsteincpa (talk|edits) said:

26 April 2013
But Deb, thats a spiff vs self employment issue. From what i heard, the IRS will be sending robo notices to all Line 21 1099's. Sort of why you got notice.

I may be wrong, but I don't believe IRS receives info you data enter into program.

Tyoungea (talk|edits) said:

8 August 2013
I am looking for a per form price list for 2013, we are in Florida and we are looking to see if we have competitive pricing Thanks!!!

PollyAdler (talk|edits) said:

8 August 2013
You know what your charged last year, right? Ok then, you need to peg any potential increse to an independent source, like the price of copper. Follow copper on Bloomberg or check and follow the Baltic Dry Index.

If copper looks bad and the ships are empty (keep in mind they should be full of Christmas goods now) then you need to hold steady. Once copper firms up, you can really stick it to the clients.

Don't pay any attention to gold and silver, the central banks are plotting to annaliate them now as I write this (as they have done before and will do again.) People will still be buying copper and shipping goods even after gold crashes. As far as your pricing goes, look at the gold market as mere static.

Saulgim (talk|edits) said:

11 October 2013
How does your office answer the following question posed by possible new clients to your firm?

"How much will my tax return cost?"

We typically have said that it depends on the complexity of your return as no one is the same.

Do you estimate on the high side or low side or not at all? Does your front staff try to answer this question or do you handle yourself?

Saulgim (talk|edits) said:

11 October 2013
How does your office answer the following question posed by possible new clients to your firm?

"How much will my tax return cost?"

We typically have said that it depends on the complexity of your return as no one is the same.

Do you estimate on the high side or low side or not at all? Does your front staff try to answer this question or do you handle yourself?

Pashalaoda (talk|edits) said:

14 October 2013
How much? I DON'T KNOW, depends on how involved it is. If you have a few minutes I can ask you some questions, try to come up with a ballpark figure. [Eliminates time-wasters, feels good to potential client that I am taking an interest in their case, good oppty to begin to establish rapport. Oftentimes that questions really is an attempt to get to know you better, to have some interaction, because the buying-decision is likely to be made on the basis of treatment, not cost.]

Generally, I try to stay away from an hourly-rate because it just sounds SO expensive. Two hours at $125/hr or four hours at $75? Some people think that way, but mostly not.

For a long time I came up with the number that I really thought then gave a range of 75% - 150%. Sticker shock is so much more easily dealt with at this point, for both me and the client. I always leave the door open for higher possibilities ("Oh, here's a form I forgot about, yah, it's a 1099-MISC for $2200 for delivering phone books; sorry, I forgot all about it. What's a SCH. C? AND an SE?? HOW MUCH MORE???"). Am less formulaic now. Always make sure that the high end (the number which will stick in their mind) is higher than the actual fee, that way we end on a high note ("Whew, I was really scared when you said it might cost FIVE MILLION DOLLARS, uh, I mean $500. I can live with $425, thanks.")

"I want to be clear", I'll say, "that I'm not giving you the low number to get you to come in and then shock you with the high number when you leave. But I want to make sure there are no ugly surprises."

Saulgim (talk|edits) said:

14 October 2013
Thanks Pash.

My thoughts pretty much exactly. I always try to estimate high so they are pleasantly surprised when it comes out less.

Do you know of any software out there that can create an estimate based on the answering of a few simple questions? This way other employees could give accurate estimates. I'm thinking it would be nice to have but I have not found anything yet. Drake software does not have this option and I'm not sure if any other software packages do???

Fsteincpa (talk|edits) said:

18 October 2013
I simply have the staff tell them where we start at for a simple W-2 return, then, and I hate the term "long form" return and let them know that if there are additional forms and or time needed it will be higher. If they have EIC, it will go up.

Makes it very quick and simple and eliminates the shoppers. If the person needs a better quote because they have additional complications, then I get involved. I also have staff say, and I always say/disclaim that clients always leave stuff out and that these are simply ranges and I will not be held responsible for a different quote. I may say about $175 and then it becomes $225. The $225 is what it is, I've in the past said, well ok, and discount it the $175, but now, I make it completely clear that it's a quote. Not a set price.

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