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Discussion:What Fee Changes Will You Make Next Year?

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Discussion Forum Index --> Business Growth Community --> What Fee Changes Will You Make Next Year?


Deback (talk|edits) said:

April 5, 2007
One change I'm going to make is to charge $10 extra if I have to remove forms from envelopes and another $10 extra if I have to open the envelopes. These amounts could be more, depending on how many envelopes are involved. I love it when people don't bring any envelopes and have all the documents opened and in an orderly pile.

Birdman (talk|edits) said:

5 April 2007
I'm going to read all of DZcpa's posts related to fees, and then try to implement. That dude knows how it's done.

Pegoo (talk|edits) said:

5 April 2007
I don't know, I'm a very slow Envelope opener and sorter. All the fees are in the billable hour :P

Bkptax (talk|edits) said:

5 April 2007
I like that! I could add it to my PITA tax assessment. I just spending 25 minutes going through envelopes that might be tax related (most of them not even opened).

Will (talk|edits) said:

5 April 2007
Birdman: I'm going to see if DZ will give me a virtual tour of his entire operation. I want a web cam at every station and every conference room. :) I was blown away to hear he was doing while-you-waits. I imagined him intaking in a conference room and delegating to his employees...

Tfortaxes@msn.com (talk|edits) said:

5 April 2007
I am going to add a whinners fee of an extra $100.00 per hour. Gees, I wish they would just shut up and hand me the paper work! Blah blah blah...Wow how about just answering the question! Am I starting to show signs of burn out....no....maybe....well, ok YES!!!!! Meet you at the fishing hole.

Birdman (talk|edits) said:

5 April 2007
perfect time to think about this.

adjust up for:

- too much time between questions asked and their answers (example - 2 weeks to see if they paid their 4 quarter estimated tax). +10% for repeat offenders

- ask 5 questions, get 2 answers with no mention of the other 3 questions, so then I re-ask the 3 remaining questions, and they answer 1, ..... +20%.

- missing any information at first drop off or meeting: +10%


-

Death&Taxes (talk|edits) said:

5 April 2007
Count PTP K-1s. Unlike Schedule D, you can't batch these and I have had two clients with more than 15.

Make sure I bill high enough for the local returns for PA localities, the HA Berkheimers that I do by hand and have to make extra copies of 2106s, Sch Cs. Proseries has a generic PA local but it is lousy and you end up doing things by hand anyway, even if you type the number in, plus you must add the mailing address to it and too much other crap.

Deback (talk|edits) said:

April 5, 2007
I've already added on an extra fee this month, if I have to spend time getting the rest of the information they didn't bring.

And, this summer, I'm going to make notes on the folders of clients who used credit cards this year and last year and increase their fees next year to recoup the fees I had to pay to Wells Fargo, rounded up to the next $10.

Because of the encouragement I've received from many of you here, I was able to raise my fees more than normal this year for many of my clients. And for those clients who complained or mentioned that I raised my fees this year, I'm going to raise their fees again next year even more than the normal percentage.

Kevinh5 (talk|edits) said:

5 April 2007
If you don't get a few complaints each year about fees, then your fees are too low.

Deback (talk|edits) said:

April 5, 2007
Michigan city returns used to be one or two pages. This year, they are three to six pages because all cities are using the same format, beginning for 2006. I think I'll charge $20 for the cities next year, instead of $10. And, yes, I should be charging extra for the cities when I have to include copies of forms from the Federal return.

Szptax (talk|edits) said:

5 April 2007
would anyone be willing to share their fee structure?

Szptax (talk|edits) said:

5 April 2007
oh - how about the missed appointment fee!

Deback (talk|edits) said:

April 5, 2007
I've never charged for missed appts, since it's not a big problem here. I don't remember any missed appts this year, and usually, I might have one or two of these in February.

RSRAGENCY (talk|edits) said:

5 April 2007
I kept my predecessor's fees as she had set, then on my 10th anniversary I increased by $25...next year will mark 15 years, so I'm going to go up another $25....

During the summer, I sent out letters stating that I WAS going to increase my fee by $25, giving clients advance notice....that way if anyone objected, they would have time to go somewhere else.....I received nothing but positive feedback...most clients remarked that I should increase EVERY year....That's not my style....so, this year I've made mention that my fees will go up next year.....NO ONE complains.....in fact, a woman just came in to pick up her papers, my fee for her was $50 more this year because she had (12) 1099-int, (16) 1099-DIV....as usual....BUT she closed out ALL IRA and pension accounts, and sold 25 different stock....so, there was MUCH more to do. When I told her my fee....she didn't even blink....

DJ

PVVCPA (talk|edits) said:

April 5, 2007
Birdman, I really liked your idea. How about a Taxi Cab meter that you start at the end of the appt. The client sees you push it, and it doesn't stop until they return the missing info or call you with the answer. Probably should have a separate meter for each outstanding item, and you do not shut off any of the meters until all of the questions are answered.

AHH (talk|edits) said:

5 April 2007
PVV, amazing, my spouse and I just had this very same thought 2 nites ago. I want a ticking noise too. Bright red numbers ticking away as they spew their sad stories. I'm usually very patient and happy to spend a little "personal" time w/ my clients but I'm wearing thin right now. Also getting tired of hearing "I'll bring you my info Fri and need it before Sun afternoon cause me and the family is going on vacation for spring break and won't be back until the 16th." Image:scream.jpg

AHH (talk|edits) said:

5 April 2007
I DONT GET TO GO ON SPRING BREAK/EASTER VACATION WITH MY FAMILY.

AHH (talk|edits) said:

5 April 2007
I DONT GET TO GO ON SPRING BREAK/EASTER VACATION WITH MY FAMILY Image:scream.jpg

TexCPA (talk|edits) said:

6 April 2007
I charge for missed apt.s w/o prior notice, my doctor charges for cancelled apt.s, as far as hourly rates, consider this, how much does a plumber or electrician or AC guy charge to visit your house? Are you charging the same if not more? Raise your rates and you drop the dead weight. Last item no one mentioned, the SLS fee: ie. smells like sh...

PVVCPA (talk|edits) said:

April 6, 2007
Tex, did you mean shinola? Because, it's so hard to tell the difference.

Maybe this will help http://www.pottymouth.org/humor/shinola.html

TexCPA (talk|edits) said:

6 April 2007
hehe

thanks Paul

Szptax (talk|edits) said:

6 April 2007
Tex, is that in your engagement letter? I meant to put it in this year, but it will definitely go in next year. I agree with you.

I think I should also charge a pet dander fee - I am seriously alergic to some of the paperwork that I get. I have to have someone else copy everything, then seal the original. I work using the copy!

DZCPA (talk|edits) said:

6 April 2007
I raise my fees 10% or $25, which ever is greater every other year without a letter warning them. $150 fees turn into $300 in about 12 years. This year I raised about 500 clients with only about 2 asking why. It works. Rarely will someone call you for a $25 charge increase. Its too low. Give it a try. IT WORKS. Don't be afraid. Your clients will not go anywhere else. I previously did it every 3 rd year. Also, add $50 FOR EACH new rental activity or schedule C to billing. Did you ever see all those fees on an escrow statement? Clients never nit pick the items on it like notary fee $40, tax document prep (1099s) $100, loan tie in fee $100, etc..

Jokadah (talk|edits) said:

6 April 2007
And speaking of fees . . . I had a new client that came to me on Monday was referred by another client. (Yes, I know I'm crazy but this is a good client referral) This is what put her over the edge, she had been going to this guy for over 20 years. He calls her and tells her that unless she has all of her stuff in his office by 4/2 he was imposing a 25% penalty to her bill! Not that hard, Sch A, Sch C (all income and expenses are printed out) so imagine my surprise when I looked at her last year's return, he charged her $1,650!! We're not talking a box o' crap that has to be sorted and added, it's a matter of transferring her figures into the Schedule C and she had all of her W-2s, 1099s. This return will take less then an hour from start to finish. The fee was $1,500 in 2004. So either I'm way underpriced or ????

CrowJD (talk|edits) said:

6 April 2007
Jokadah: Perhaps that guy has a lot of older clients who just don't price shop. He's really foolish to be running an established client off with 25% penalty (maybe he doesn't care, and is close to retirement). I'm from the South also, and we don't get those kind of fees for itemized and a simple Sch. C and good records.

PVVCPA (talk|edits) said:

April 6, 2007
OK, Jokadah, the big question is, so how much are you going to charge her?

I say give her a discount down to $1,600.

If this other preparer is retiring, then it is time to start wining & dining.

Death&Taxes (talk|edits) said:

6 April 2007
Last night I was doing this retiree, 7 1099Rs and a Raymond James account, and I could not remember why I billed him $275 last year until I opened another brown envelope and pulled out 16 K-1s for PTPs, some bought and sold in the same year. Yes, Raymond James had the gain and loss on them, but as they noted, not done in form for partnership accounting. I must have been channeling DZ for I raised them $25. Took less than 30 minute to put the base information on the return, but I was another hour entering K-1s.

btw, with Pennsylvania you must enclose the K-1s or fill in the address for each on a worksheet if you want to efile. It is easier to paper file and clog Harrisburg with all this needless information.

Szptax (talk|edits) said:

6 April 2007
D&T - do you do a mock up of a PA k-1 for efile?

Death&Taxes (talk|edits) said:

6 April 2007
Then you get calls from clients about their parents. Three years ago it was "My parents paid this guy $4250 last year and it is a simple return. They are 86 la la la la." So I found myself driving to Long Island one Sunday in February, thru Manhattan and out the LIE to Great Neck, only to find that all the information was for the prior year. They fell ill so I had to go back after the deadline. They hadn't paid estimated taxes and had a 30K liability. Had the penalties waived with a good letter, did Gift Taxes also and in working with them, was given a seat at a low parson's table while sitting in a soft easy chair. Outlets were not 3 prong so I was lucky to have a converter for the laptop.

Every other trip up there was on a weekday, up the Brooklyn Queens Expressway, to sit an hour in traffic on it or on the Verrazano Narrows or the Outerbridge Crossing. I was billing per actual hours put in, at $150 an hour so my fee was less than half but that did not compensate me for the 10pm phone calls from this whiny old man. This year I did not hear from them....in the prior year they had reverted to their former stockbroker and their former investment advisor, all of whom daughter, a geriatric lawyer, had replaced. So I guess they went back to the Manhattan firm. Wonder they charged for this year....this is the firm that gave him a home office for diddling with some work in retirement.

PVVCPA (talk|edits) said:

April 6, 2007
D&T, Maybe the Manhattan firm does not clean up their database each year and sent them an organizer. It has been a whole year, and they are 87. Maybe they forgot about you.

10pm - You need a separate business line.

Death&Taxes (talk|edits) said:

6 April 2007
I do have a separate business line PVV, and with my old v-Tech I could turn off the ringer very easily. But often I would either forget to turn off the ring in my office or turn down the volume on the answer machine.

SZ: Proseries imports the K-1s from the Federal, but to efile, every one of them needs a City, State and Zipcode. It is easier and cheaper for us to run the copier than to sit and enter these. These are 16 PTPs; if I recall another client who lives in NY is ineligible to efile Federally because of her 30+ PTPs. I tried the last two years and could not so did not even bother this year.

Pennsylvania has been in the forefront of a trend in taxing authorities whereby they try to make things easier for them, and harder for us: Do not staple returns if paper filing; fax a signed copy of other state returns if taking a credit if you are efiling.

DZCPA (talk|edits) said:

6 April 2007
Key Point - Do not tell client IN ADVANCE of fee increase unless over $100 more. Just bill it . You can explain reason latter if they call. Over 90% will never call. Trust me. My partner and I have been doing this since 1988 with 2,000+ clients each year. Give it a try. You are worth it!!!

Corptaxhelp (talk|edits) said:

April 6, 2007
RSRAGENCY: $25 increase after *ten* years?!?! Did that even cover inflation?

Please charge more money. Seriously.

Bottom Line (talk|edits) said:

6 April 2007
The last couple of years I've been increasing everyone each year even if it's only $5. If there's less work to do, I don't increase and may even give them a reduction. For example if the prior year there was a state return and now there's not or they no longer have rental property. For new clients I always ask for a copy of the prior return. Usually the invoice is still in the packet. I've never really had a billing standard for tax returns (but am working on putting that in ProSeries since it will give me an idea for comparison). When the prior preparer charged a huge amount, I charge something less than this and the client thinks I'm wonderful. Some of the charges in my opinion are outrageous for the work involved such as in Jokadah's example

PVVCPA (talk|edits) said:

April 6, 2007
I agree with BL (and everybody else that agrees with BL). Same return = Minimum fee increase of $5. If you don't do this every year, they will question you whenever you do do it. Funny, I just said do-do!

TexCPA (talk|edits) said:

6 April 2007
SZP: I include the $50 charge for cancelled apt's w/o notice, charge for telephone and emails as well, returned checks (I have had two, both paid the balance and the fee) Regarding the emails / telephone calls, I have a client that travels and is only home 2 weeks out of year, I told him to use email and telephone calls for questions, he needs that 2 weeks with family not CPA. i also charge a small fee for my travel time, but not my full hourly rate.

BL, your right, new clients I ask for 2 years returns 9sometimes you find a missed 1099) and sure enough there is the HR or JH bill, my fees are very much in line (slightly higher) then HR / JH

Charging higher fees really gets rid of the rif raf

Bottom Line (talk|edits) said:

6 April 2007
Two or three times during tax season I have clients tell me I'm too cheap. That (and this forum) has decreased my hesitation about raising rates. I still have a problem charging high rates when I consider the time involved with a return. Need to remind myself that it's not only the time, it's the knowledge.

Wwtaxes (talk|edits) said:

6 April 2007
We've always charged more on flat rates than hourly billing, but this year, there has been a huge increase in PITA issues - all kinds of messes that take up too much of our time. We've always notified clients of rate raises in their reminder letter. But I don't see how we can start adding an extra fee for the PITA and still warn them in advance without scaring them off. I'd like to charge extra for their 5 kids running and screaming through the office, the double and triple visits bc they can't bring everything in the first time, the 25 emails from one TP bc he sends me each piece of info one...at...a...time, etc, etc.

If we don't do something, this is going to become a losing proposition. I'm thinking of warning them when we tell them to get us the rest of their stuff that they will incur extra fees if we don't get it timely.

Jokadah (talk|edits) said:

6 April 2007
Hmmm what am I going to charge?? Well, this is one of those that will not get my regular rate and let me explain why. For years she has been paying in excess of $1K. If I bill her my normal rates, somewhere around $250-$300 she would probably not think I'm a bargain but question how accuarate her return is. So with clients from the Bay Area and Marin, I bill at a higher rate and will probably charge her around $500ish. Most things in live are negotiable and this fluxuation also allows me to bill seniors and active military at a reduce rate.

Bottom Line (talk|edits) said:

6 April 2007
I'd probably do something similar (though I might charge around $600-$700 so as not to go too far below what she's been paying). Agreed that if you charge your normal rate (which I assume you believe is fair), she won't think that she's getting a bargain or that she's been overcharged before. Instead she would probably question your ability.

Wahlerpc (talk|edits) said:

6 April 2007
Everyone, I have religiously increased my fees by inflation every year since 1980 (I have been around a while!) I have never had even one complaint. My engagement letter says that if their return is similar in complexity to the prior year, they will get the increase. If it is more difficult or less, there will be an appropriate adjustment. This has worked very well for me. Think about it. They have to pay a little more for everything they buy. Why should our services be inflation proof to them? To not increase by at least inflation, we are implying that our services are becoming less valuable each year. Makes no sense to me. Never forget, we are not non-profit organizations. We are in business to make a profit.

I have some attorney clients who charge $350 - $500 for their time. If I were to charge them less than $250 for mine, they would think I must not be very good. So, guess what I charge them?

We must be bolder in our billing approach. We must take a market value approach, rather than a rate-per-hour or per forms approach. Otherwise, we are underselling our value and working for far less than we are worth. How does the return you are about to bill compare to similar returns you have prepared and the bills for those returns? Don't bill less, even if your time spent is less. Think value.

We don't want to be greedy, but we should be fair to both our clients and to ourselves. We are professionals. Never forget that. The price should equal the value. That should be our cardinal rule.

DZCPA (talk|edits) said:

8 April 2007
Excellent!

Sw (talk|edits) said:

April 9, 2007
OK I knew I din't charge enough, but I just had someone bring in their tax information. Went to JH last year single, 1 w-2 no 401k no nothing. 1040EZ They charges her $ 114.00 last year. There is no way I could or would charge that.

Deback (talk|edits) said:

April 9, 2007
I had one like that today...a new client. One W-2, one 1040, and one State form. Charged him $80. I felt like I was overcharging, but I've gone up to $80 this year from $70 for two tax forms with either one or two W-2 forms. If they itemize and have only three or four quick entries on the Sch A, I charge $90. Addl forms are usually $10 each, but Schs C, E, and F are usually more than $10 extra and could be up to $70 more, if there is a lot involved with those forms. I'll charge $10 for every three entries on those forms, and $10 for Sch D for every two entries. Senior citizens with low income get $20 discounts.

Wwtaxes (talk|edits) said:

9 April 2007
Several years ago, we got a new client that had been with JH. It was my first real year of doing returns, as opposed to just doing research and the trivial ones. It wasn't that much more work to enter the previous year's taxes, and transfer the data over than doing just the current year's taxes. So I did that, just to see if I would get the same answer. The TP was married, with a normal schedule A and B. No D, but the wife was a nurse who also taught courses on-site at various locations (30-60 miles away) and got paid via 1099 for this. JH took all her business expenses on the 2106 and didn't allocate any of them to the C. Needless to say, my version didn't match theirs.

They also had 3 teenage boys 1040EZ returns (1-2 W2's each). JH also missed claiming the fourth son as a qualifying relative since he had no income. JH charged them $850 for this batch of fine work. We didn't charge anywhere near that, and told him he should amend the prior return. He's been a loyal client ever since.

Sw (talk|edits) said:

April 9, 2007
Yes, I know I need to go up, I usually charge $ 50.00 if their single only 1 w-2, 1040 and Ky.

But I'm also from an area where most people make $10.00 to $15.00 an hour and think they make "big" money.

Laticiaw (talk|edits) said:

9 April 2007
You thought you were over charging for 114? Sorry, I would have billed them at least 120...and I don't do the billing. Most of them don't even know what they are paying half the time and will pay whatever you say...If they are coming from JH or Block, nin time outta ten we are looking at someone who efiled and got the outragous interest rate loan that had the JH or Block fees buried in the loan so that they don't really have a CLUE what they paid...

Sorry, I guess I am used to working in a CPA office where if we can't make 250.00 off the return, it isn't worth the time. I charge at least 100.00 plus the cost of efiling if I do a return "on the side" I only do that for one person and that is because she was my neighbor and she is one of my husband's coworkers...

Bottom Line (talk|edits) said:

9 April 2007
Just picked up a new client! I do their QB training and periodic reviews but they had one of the local "big" CPA firms do their return last year. LLC filing 1120S started business 8/1/05. The CPA charged them $1425 to do the 1120S for 2005. They went back to them this year but when they got the return, it showed NI of twice what it actually was. One of the owners asked to go over the return and was told that the numbers were right and to pay the tax (basically a brush off). I was asked to review the return and it made absolutely no sense to me. Couldn't tie ANY of the numbers back. Got a call from one of the owners yesterday. Could I do the return and oh by the way she needed the K-1 by 4/13 for financial aid for a child. I told her I'd do it and she said that they'd be happy to pay extra for a rush job. Took me a total of two hours including stapling and collating! I charged $1000 plus 15% for the rush!

LAEsquire (talk|edits) said:

9 April 2007
I'm an attorney not an accountant, but found this discussion very interesting, and would like to add the fee I from time to time think of charging, but haven't had the nerve to yet:

$100 surcharge for AOL email users.

I've yet to see an AOL-er that knows how to quote prior email in their replies (yes, it can be done; decent programs do it automatically). Thus, replies to detailed questions come back as one-line emails with "yes", "no", "14", and the like in them. Or multiple emails come back, one with "yes", one with "no", and the last with "14" - I have to research my sent mail to find out what the hell they're talking about.

Deback (talk|edits) said:

April 9, 2007
BL - As DZ would say, "Excellent!"

Bottom Line (talk|edits) said:

9 April 2007
I'm learning slowly but surely. Last year I would have felt guilty about charging $500.

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