Discussion:Fees for Seasonal Tax Preparation

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Swgordon (talk|edits) said:

November 20, 2013

I recently started my own practice and I plan on working part time at another CPA firm during tax season to supplement my income while I build my business. I wanted to know what is a fair amount to charge for my tax prep services? I am a CPA and live in the DC Metro area. Firms in my area typically bill between $150 an hour for staff up to $300 for partners. I was thinking that 1/3 of billing would be a fair amount which would put me around $75 an hour. Is that reasonable? To low maybe?

Also, in my practice, I plan on providing some bookkeeping services but I have no knowledge of what typical billing rates are for that. What is typical in a Metro area like DC?

Thanks for any input.


AgwmTax (talk|edits) said:

20 November 2013
Are you working out of your home or do you have a store front?

The average tax prep fees for DC Metro for a 1040 with Sch A and state/local return is $253.

I can do a typical 1040 with Sch A in an hour.

Obviously you will have to adjust based on your local competition. Bookkeeping charges vary widely and is hard to compare. I have seen bookkeepers advertise $15 to $20 an hour for Quickbook. We don't know how experienced they and if that includes payroll.

PDXTaxman (talk|edits) said:

20 November 2013
Can't speak to the fees typical in D.C., but in general you shouldn't price yourself too low. Even out of your own home, you need to assume some overhead expenses. E.g., software, insurance, and more. Plus: if you price yourself in the bargain basement, that's the kind of clients you'll have. If later you want or need to increase fees, you'll rapidly lose those clients. And even while you have them, you might not appreciate all of them. When we first started we offered pretty low rates ... and yet STILL had people come in and whine to us about them being too much at pick-up time. When folks call now asking about our prices, I direct them to our website, I give a brief description, and I encourage them to do their own comparison shopping. If they find a lower price elsewhere, they should take it (and expect substandard work).

Be sure to use an engagement letter from the get-go, and be sure to require some kind of retainer payment up front from the get-go, or you'll end up with a file full of completed returns that no one will pick up and pay you for. They'll say, "Oh, I want my original documents back, I've decided to do it myself." Don't let that happen to you.

Bottom Line (talk|edits) said:

21 November 2013
I'm an EA in the Tampa area and do a lot of bookkeeping. I charge $30-$60/hr and am not taking any new bookkeeping clients at less than $40/hr. I work fast and get more done (and correctly) than the $10-$15/hr people. My clients understand that you get what you pay for. I do their tax returns too. For the client, this means that they are getting some tax advice all during the year. For me, it means that the tax return is done very quickly because I don't have to review someone else's books to make sure they are correct.

I have a few tax clients that were referred by a $10/hr bookkeeper. I review the books once a quarter (takes about an hour and I charge $100). Now I rarely make changes because the bookkeeper is with me and I have been training her as I make the adjustments. She learns and I get good clients!

Swgordon (talk|edits) said:

November 21, 2013
Thanks for the responses. I will have an office space. I thought about working from home but I think that will really hinder me. The bookkeeping fees were along the lines of what I was thinking. I think I will just have to charge a decent minimum amount and if I get business fine and if not oh well. I'm definitely not doing anything for $20 an hour.

Regarding the tax prep fees, I wasn't clear in what I was asking. I wanted to know what is a fair consulting fee to charge the other CPA firm that I will be working part-time for preparing tax returns for their clients. I was thinking $75 per hour, or 1/3 of billing if they bill per form, would be a fair amount but wanted to get some input?

Regarding my tax prep fees for my firm I agree that I shouldn't go too low. My minimum will probably be $300 for 1040 w/ sched A and on up from there. I was thinking $300 for first 1.5 hours (minimum) and then $200 per hour additional thereafter.

JackTraffic (talk|edits) said:

23 November 2013
I don't want to stir up trouble but I recently took some MAP survey numbers (this is the CPA statistical study that comes out every year) and figured out that a staff accountant once you loaded in their proportional share of overhead costs about $90,000 a year: That's salary, benefits, payroll taxes, their software, office space, etc. The whole shebang.

That person will on average have 1500 chargeable hours... so that means to simply break even you need to charge $60 an hour for those 1500 hours. (I was doing this math to figure out what would be a fair billing rate for staff people... and I realized, geez, I have to be way over $60 an hour unless I'm running a charity that employs young accountants.)

But I think there's a take-away on this for solo practitioners: I propose that unless you're only a modestly experienced staff accountant, you need to be way above $60 an hour for every hour.

If you don't price (or figure out how to price) your work at a professional rate, you'll work way too hard.

Bottom Line (talk|edits) said:

26 November 2013
It depends upon what you're doing. You may have a hard time getting $60/hr for bookkeeping work but you'll make up for it on tax work. It averages out. I make my profit during tax season and run slightly above break even the rest of the year. But the bookwork I do during the rest of the year brings in tax clients and makes the tax prep go faster.

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