I need your feedback. I am preparing for my first tax season as I have expanded my business. I noticed a few companies charges a flat rate or an hourly rate.
Scenario, a client has a simple tax return (i.e T4, RRSP, Donations) that would normally take half an hour to complete. Charging a flat rate of $120 versus charging an hourly charge of $150 x .5 = $75. I would think the flat rate is better as you have a higher income.
What are your thoughts? I am trying to weight the pros and cons of charging a flat rate versus by the hour.
Value, or the worth of your work, should be more important to the client than cost. If it isn’t, the client needs to be educated about the value of your service vs your competitor, or doing his own T1 return online.
It would seem to me that a fee structure based on value based billing, regardless of time involved to punch numbers into a piece of software, would yield the best overall result.
I changed my billing structure a number of years ago. I charge a flat per return fee, the flat rate was somewhat higher but I educated my clients that it was a yearly consulting fee rather than a fee for preparing their tax return. This fee includes all questions they may have over the course of the year. I hated trying to keep track of times per client and this method worked quite well for me. Anytime anyone called wondering what it would cost to prepare a tax return, I could tell them. This of course depends on your client base, if you do a lot of bookkeeping it will not work. Good luck in your future business, it’s a fun industry.