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Discussion:New Billing Strategy

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Discussion Forum Index --> Tax Questions --> New Billing Strategy


Jdugancpa (talk|edits) said:

24 February 2007
Tired of your client's questioning your bills? I think I'm going to start using the IRS estimate average times for my returns. Page 38 of 1120S instructions gives the following:

Preparing the 1120S form 48hrs, 27 minutes. Copying, assembling and sending 5 hrs, 54 minutes. Sch K-1 preparing the form 16 hrs, 3 minutes. Copying, assembling and sending the form 1 hr, 4 minutes.

Shoot, you should be able to justify most bills using minimum wage!

Will (talk|edits) said:

24 February 2007
I like it! It's 9pm and I'm re-motivated, thanks JDugan. Lets see, hourly rate times 48.4...

Deback (talk|edits) said:

February 24, 2007
I've always wondered how the IRS comes up with the average times to complete returns. Wow! Six hours to copy and assemble? An hour to assemble and copy a K-1? I wonder how old their copy machines are?

Will (talk|edits) said:

24 February 2007
lol, think it is based on a mimeograph machine?

Deback (talk|edits) said:

February 24, 2007
Could be.

I took DZ's advice that he posted here back in January and bought a new, faster printer. Received it today, and it prints so fast that I hardly have time to turn around and stand up to reach for the copies. The forms are flying out of the printer now. I was going to wait until summer or fall, but I decided to buy it now and am glad I did.

(No, DZ, I won't be charging less now that I can print at least four times faster.)

Pegoo (talk|edits) said:

24 February 2007
Those time estimates are based on a filer doing it by hand without the help of software.

PVVCPA (talk|edits) said:

February 24, 2007
Do you think it is 1 hour & 4 minutes for each K-1?

DZCPA (talk|edits) said:

24 February 2007
Deback, Great! Are you done with the first 200 returns yet?? My office is like a 20 ring circus. Retuns everywhere.

Death&Taxes (talk|edits) said:

24 February 2007
'Round 'em up, move 'em out. Rawhide!' One thing I have noticed in the past five years is how much less the phone rings and how many more emails there are. And did you ever notice that if you have 20 returns with missing information, it all comes in at once?

Deback (talk|edits) said:

February 24, 2007
DZ - Had 213 returns done by the end of Feb 9th. Am currently at 388 done as of last night, plus 15 more in the pending basket that are almost done except for some missing info. This is about 30 less than I had done at this time last year. I think this is because I've had less new clients this year due to not advertising in the last four years, more people are doing their own, and it was extremely cold here in early Feb. Not sure if the third factor is relevant or not. I expect about 350 more (including the current pendings), but it might end up being a few less than that.

DT - I have my email address listed on my Dec letter, but only about a handful use email to send me addl info. I've never pushed email and prefer them to drop-off their envelopes or mail them to me. A lot of clients drop their envelopes off in the drop box that's on my front porch. Yea, I've noticed that missing info tends to come in at once, at times.

Death&Taxes (talk|edits) said:

24 February 2007
I must have 50 returns where I receive PDFs of W-2s, K-1s, 1098s and other documents, and then lists of expenses in Excel format, or Word with an occasional gif or jpeg. When done they receive pdf copy to review [encoded] and then fax back the 8879 and state authorizations. Great improvement on the faxed information, where often the quality of the machine causes so many blurs etc. Used to be that by April 8th or so, my voice was going from talking, but no more.

Deback (talk|edits) said:

February 24, 2007
My voice started going about a week ago, but now that I haven't been doing appts since Tuesday, it's coming back. The cough is still there, though. (Gotta quit, gotta quit, gotta quit....)

LJACPA (talk|edits) said:

24 February 2007
I am constantly amazed at the number of returns y'all process! I've complete only about 10 and still have half not picked up. What in the world am I doing wrong??? I spent the better part of two days cleaning up a client's QB and still am not to the return yet. What in the world kind of returns do you do, Deb, that you could have over 200 done by 2/09? Would just love to know. I'm changing my practice as of 4/18, honest to gosh!

Bottom Line (talk|edits) said:

24 February 2007
LJACPA sounds like you're in the same rut I am. Spending too much time cleaning up work before I can get to the tax return. (And it's difficult to charge for the cleanup because they think it was done correctly.) I try to get a look at those files in Sept or Nov (Oct's a payroll tax month). If I can get a mid year review, saves some time at tax time.

JEllegate (talk|edits) said:

24 February 2007
LJACPA - I've only got about 35 individual returns done so far (although I have about 20 corporate returns and several partnerships done too). I refuse to prepare any individual returns before 2/15 as it is inevitable that the client will receive at least one revised 1099 (sometimes several) or not have all information needed prior to then. I am amazed too that some of these folks have 200+ returns done by now...I couldn't do it. And like you, I spend a fair amount of time "adjusting" client's books and records too (although we like 'em messy since we charge for all that time). 10 years ago I was even able to squeeze in an audit and several review engagements during tax season...I guess I'm slowing down some since now whatever audit and review work doesn't get done by Jan 31st gets pushed back until after 4/15.

DZCPA (talk|edits) said:

25 February 2007
I'm "only" at 257 returns out the door (31 corps, 226 individual- average feefor all $394), 20 waiting for info, 18 waiting for a quick 5 minute review by me, 52 waiting to be prepared. "Its getting hot in here"

Deback (talk|edits) said:

February 25, 2007
LJA and JEllegate - (Sorry this is so long...)

I live in mid-Michigan, south of Lansing. It's not a high-income area. I have a lot of GM and State employees, retirees, etc., so many of the returns I do are not complex (especially those in the first six weeks of tax season).

I've only done one corp so far (very quick, with about 5 entries) and one partnership (quicker, done manually, with no entries, just to finalize it). I'll have three more C Corps for my monthly clients, one S-Corp (which doesn't have many entries), and maybe one or two more partnerships. I quit taking new monthly acct clients back in 1995, because it was hard to find time to do all of the accounting work (for about 15 monthly clients back then) during tax season, when I had about 900 to 950 tax returns to do back then. When I started this in 1976, I only wanted to do individual tax returns, but I started doing accounting in 1980 and had about 25 different monthly clients at various times from 1980 through about 1995.

I do a lot of Schs A, B, C, D, E, F, EIC, 4835, state property tax credits, and various cities, but mostly Lansing. The majority of returns will have 1040, Sch A, state, and maybe a city. Most take between 10 and 20 minutes to complete. A few take 5 min. Several take 25 to 60 minutes to complete. Some take between an hour and two hours to complete. To keep up and get them all done by April 15th, I have to do at least 14 per day for the first four weeks, from around the fourth week of Jan through near the end of Feb. Many of the returns in the next 7 weeks will take longer than those I did in the last 6 weeks, so I'll only have to do about 7 or 8 returns a day in the next 7 weeks, excluding Sundays. I usually only have to work on Sundays for the first six weeks.

Finished as of today - 395, waiting for info - 20, to be prepared - 10, estimated number of returns to be dropped off and mailed to me in the next 7 weeks - 315. Average fee is much less than DZ's, but mid-Michigan is not California, and I have to charge fees that are competitive with other preparers in my area.

I just spent a couple of hours doing all of the waiting-to-be-amended returns--4 were for addl info received after the originals were efiled, one was for a prior client who had her sister do her 2005 return and the sister forgot to include the sale of $38,000 in mutual funds and to reduce an IRA contrib from 3,500 to 1,500, and one to claim blind status for a spouse who just discovered she missed that deduction (has been blind since birth--amended 3 years Federal and 4 years State). I don't get many amendeds to add addl info received later--maybe four or five total each year, so it wouldn't be a good idea for me to wait until Feb 15th to start preparing taxes. Before today, I've also amended three or four 2005 returns for minor errors I made in 2006 (one wasn't so minor--I didn't notice $5,000 DCB on the W-2, and he owes $1,000 to the IRS--I returned that client's $130 fee for 2006).

Deback (talk|edits) said:

February 25, 2007
Also, I do very few extensions--maybe three or four each year, and I will usually only have about six or so between April 16th and the end of the year. I love the freedom for 9 months and would rather get them all done by April 15th.

Actionbsns (talk|edits) said:

25 February 2007
I'm amazed at the numbers of returns being done by some of you. How many people do you have on staff? I'm agonizing over an 1120s that's terminating this year. I'd really like to have more of those "simple" W-2 only with maybe a little 1099 interest, are they still out there?

Deback (talk|edits) said:

February 25, 2007
I've never had any employees.

DZCPA (talk|edits) said:

25 February 2007
4 Part timers working about 100 hours a week, I clerk working 40 hours answering phones, making appts,and assembly. I see people from 9am until 8pm Monday thru Saturday. Stay late until 10pm to 11pm. Yawn! I wish I had the energy of Deb. I guess I'm just getting old.

ScottCPA (talk|edits) said:

25 February 2007
Deback - wow NO EMPLOYEES!! and doing 700+ 1040's. Not even an administrative person? How in the world can you get their info, answer any questions, print/assemble, collect their money, etc. and be done in 10-20minutes "for most returns"??

Are you absolutely doing NO appointments? I know what you mean about most returns taking 10-20 minutes, but for those that I have appts with, it's usually 1/2 hr there, so almost always takes at least 3/4 hr to do any "normal" type of 1040. Maybe I should refuse appointments. Hate to go that extreme, although we've pushed the drop offs, so we're over 50% drop off now.

I do about 725+ 1040's & 60+ 1120S/1065/1041/1120. Plus a few payrolls to do and one monthly write up that takes about 30hrs each month. So I have 1 FT accountant doing that acctg work and 1 FT admin asst during tax season. I am dying to train someone to do these 1040's - I keep trying, I do tons of on the job teaching, with bright people, but I have yet to be able to just turn them loose and let them do em - I just don't know how the other tax factories do that, I mean most of the H&R Block returns I see are done right. Maybe their software helps guide the preparer thru the return better than Lacerte? I'll quit rambling!

Bottom Line (talk|edits) said:

25 February 2007
Can't speak to the Block software but the JH is so simple your 10 year old child could do it. It's a long interview that the preparer can read word for word off the computer. It then tells you what where to put the info from the various boxes on the paperwork. I've had various clericals over the years but have only found one that was reliable (college kid who can only work nights and can only give me 10 hours per week). I'm trying to figure out how to hire someone that's finished the JH or HR tax school. Maybe I should hang around their parking lots during the fall!

ScottCPA (talk|edits) said:

25 February 2007
FYI - i have an employee that i sent thru the H&R Block course last yr. She was by far one of the best students. But when it came time to do taxes for me, with Lacerte, almost never could i send a return out the door without changes. The simple things like picking up prior yr state tax refunds or balance due - rarely got it right (still to this day!!). And she is a rather bright person, so I'm thinking that their software has a lot to do with it.

Deback (talk|edits) said:

February 25, 2007
Scott,

Yup, no employees. I do everything--answer the phone, interview clients and prepare tax returns, collect the money, prepare the bank deposits, pull and file folders, sweep the floor, mop the floor by the front door, dust, wash the dishes, wash the clothes, get groceries, make bank deposits, take out the trash, shovel the porch area and in front of the garage where the snow removal guy's plow can't reach, answer questions, fix equipment, upgrade computers, change fluorescent bulbs, add more paper in the printer and copier trays, print and assemble copies for clients and myself, install the programs, make bologna sandwiches, cook sometimes at night (spaghetti, shrimp, hamburgs), buy office supplies from eBay and Staples or Office Max, etc.

Although many returns only take 10 minutes, I should have said that my average time is 20 to 30 minutes for just the preparation and printing/assembling, if I have to come up with an average for all 736 returns that I did last year. But with all the other work that's involved (phone calls, time spent talking to clients when they drop off or pick up, printing forms, letters, and envelopes, filing, ordering supplies, etc.), the average time per client would be more than 30 minutes. I do appointments and prepare many of the returns while clients are sitting in chairs in front of my desk staring at me (those are the returns that don't have complex Sch C, E, F, etc), but I only do that from Jan 15th through near the end of Feb. My last day for appts this year was last Monday, plus three more later in this last week. One of these years, I'm going to change that and not do returns while they wait, I think, but so far, I usually have enough energy to do it that way for about five weeks at the beginning of tax season. Of course, if I did a lot of 1120, 1120-S, and 1065s, my system would be a lot different. I'm satisfied with doing 99% 1040s for the ordinary folks.

Death&Taxes (talk|edits) said:

25 February 2007
Deb, that is amazing! I always had a saying 'that if you stuck a broom up her rear she would sweep the floor at the same time' but you seem to do that. Here I stop at the printing end.

I started nine returns since my client, and long time friend, Elizabeth left yesterday after sharing Pam's lentil soup with us for lunch and getting her returns done. All are not finished because missing information [hmmmm, what is this about child care; there was no kid on the return last year.....gotta email her]. Most are routine, but every once in a while one comes in that requires putting on a thinking cap, like the one I posted the other night about McClatchy buying out Knight Ridder, or one with six or seven exercises of non-qualified options or ISOs. These make tax prep worthwhile and stimulating, but sometimes from the questions I see here, like about options, I wonder how many are lucky enough to see such things.

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