Tax Preparation Fees and Services

Screen Shot 2015-06-09 at 9.19.17 PMThe National Trends and Averages

By CPA Trendlines Research

While tax professionals taking a well-deserved break this summer, they are also carefully assessing how well – or poorly – they fared in Tax Season 2015 and they are beginning to lay plans for Tax Season 2016. Chief among their concerns will, no doubt, be a thorough review of their mix of services and fees.

Fortunately, CPA Trendlines has compiled authoritative data in an easy-to-use set of charts, graphs and infographics to guide the strategizing for 2016.

In this report, CPA Trendlines reveals:

  • The average time it takes an amateur do-it-yourselfer to do a 1040 – useful information in understanding and communicating to clients the true value of a professional.
  • How many tax professionals give away over $100 per client in free consultations – and how competitive the market may be for practitioners.
  • Prices by type of form: Itemized 1040; State; Schedule C’s; 940s; 1065s; 1120Ss.
  • Prices by region: West, Midwest, Northeast and South.
  • How many preparers charge to file an extension and how much they charge.
  • Trends in 1040 business.
  • Practitioners’ age ranges and years in business.
  • The characteristics of the communities in which they operate.

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Why the Average Fee Doesn’t Matter

Ed Mendlowitz CPA The Practice Doctor Q and ANot all data is relevant.

By Ed Mendlowitz
The Practice Doctor

Question: What is the average fee that your firm charges for a review? Assume the company is approximately $10 million in sales and $3 million in assets.

Answer: What is the average size suit men wear? This might be nice to know but it is not relevant to any specific situation. READ MORE →

How to Tell a Client How the Fee Was Set

Ed Mendlowitz CPA The Practice Doctor Q and ABy Ed Mendlowitz
The CPA Trendlines Practice Doctor

QUESTION: I performed some additional services for a client and gave her a bill that she questioned and wanted to know how much time I had spent. I billed more than the time charges, but this client never gets time bills – everything I do is on a fixed fee so I never account for my time with her. What should I say now?

MORE PRACTICE DOCTOR Q&A: 18 Ways to Blow a Partnership Opportunity | When Experience Doesn’t Add Up | 8 Times When Hourly Billing Trumps Value Pricing | 6 Simple Steps to Impress a Prospect | Making Meetings More Productive | 5 Time Management Tips for an Overworked Accountant | Running an Accounting Business | 14 Ways to Switch to Value Pricing | Pricing, Billing, Costing: Don’t Blame Clients

RESPONSE: If a client is on a strict time basis, they are entitled to a breakdown of the hours and person performing the services.

Otherwise, when clients ask me how I arrived at a bill I tell them something similar to this:

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8 Times When Hourly Billing Trumps Value Pricing

Ed Mendlowitz CPA The Practice Doctor Q and AAnd when it doesn’t.

By Ed Mendlowitz
The CPA Trendlines Practice Doctor

QUESTION: I am trying to switching to value pricing and am having trouble getting completely away from time-based billing in certain situations.

RESPONSE: Value pricing is a great method and concept. I suggest reading, and thoroughly understanding Ron Baker’s “Implementing Value Pricing: A Radical Business Model for Professional Firms.” I like what he suggests, have used some of his techniques even before he started writing and speaking about them, and recommend it in many situations.

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Client’s Difficult Daughter Balks at Bill

Ed Mendlowitz CPA The Practice Doctor Q and ADo you talk to the dad?

By Ed Mendlowitz
The CPA Trendlines Practice Doctor

QUESTION: I have a very good client who pays us to prepare his daughter’s tax return. The daughter was going through a divorce and asked us to assist her and her attorney and she said she would pay us herself, and we shouldn’t ask her father to pay us and she also asked us not to tell her father what was going on. We did a lot of work and because of what we did she got a much better settlement than if we did not help her. Additionally a lot of what we did was rush on-demand work and some of it was quite difficult. Also, she was not the most pleasant to deal with on many occasions. READ MORE →

Quick Tax Season Billing Tip

By Ed Mendlowitz 

When you perform additional services on a tax return that you will be charging for, list it as a separate item along with the fee for that service. This way the client will know that something extra was done and the charge.

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Is the Profit Squeeze Over?

New trends emerge in net profit margins and accounts receivable.

After years of intensifying and debilitating pressure on bottom lines, profits at tax, accounting and bookkeeping firms appear to be hitting 10-year highs, according to information obtained by CPA Trendlines from Sageworks, the specialist in tracking private-company financials. READ MORE →