Hello ProTaxCommunity members,
I’m not sure if this is a taboo question. I’ve search other posts, and was not able to find the answer.
How do you charge your work? per schedule, per hour? What guide do you use to set your price? I guess many of you will come back saying to price it according to what my work is worth. I still need some guidance. Why is it nobody shares, or gives clues on what they are charging? I need help on this, and thought this would be the best place to get some answers.
Thank you all for your time. This is a sincere question; I hope nobody gets offended.
I don’t think it’s a taboo question. I’ve seen posts about fees here before. I charge a basic fee of $100 per return and it goes up from there depending on complexity. Business returns start at $250.
I start at $100 for a return that all information can be downloaded from the CRA website, $150 for those with a few slips (donations etc) and $100 per “complicating factor” (lots of slips, rentals, self employment, T1135, Sch 3’s that I have to track down costs for among others.) It generally works out to about $90/hr when I do the data entry myself and about $25/hr to assistants and $150/hr to me when I am reviewing their work. I farm out as much to my assistants as possible and my assistants are still very junior for the most part.
We don’t do any simple returns. If you only slips that are downloadable from CRA then we aren’t the firm for you. Occasionally we will do kids of our clients that fit that description, and we bill them about $75-100 but we try hard not to do that kind of work. There are lots of folks out there who do that work, and even software that they can do it themselves on. $75 just barely covers our costs.
So with that understanding: Our base for a return is $195, and there are additional costs per business/farm/fishery/rental/complicated capital transactions etc. We use the pricing function built into TaxCycle for a “per schedule” price and it almost never calculates a price that is less than $195 because of how complicated the returns usually are.
We also offer seniors discounts and “friends and family” discounts for all family members of staff, as well as their good friends and and ex-staff. We get a lot of referrals from people who fall into those categories and it has always been worth it. I also let the staff override any invoice that they believe is “too much”. So we do a dozen or so lower income people with complicated returns for a deep discount.
I’ve been curious about this too. I want to be inexpensive, but I don’t want to be charging way too little and cheating myself in the process. We aren’t CPAs and our office is in my home, so our overhead is very very low. For Canadian returns, we start at $75 for a basic no fuss return and charge by the schedule after that. Most schedules are $5. T777s and adjustments are $25. T2125s, T776s, and TL2s are $50. We averaged around $200 per return last year because we have very few “no fuss” returns.
Like jglass says, most of the “no fuss” returns are referrals or children of clients just getting started. We do a student’s first filing year free. They grow with us and it is definitely worth it. It’s nice for our egos that we have a lot of multi-generational family systems. When new spouses enter the picture, the new couple almost always stays with us.
We also do a lot of cross-border work, which we charge $50 an hour for because those tend to consume a lot of time. We won’t get in over our heads and have a complexity limit for those before we refer them to our cross border CPA colleague. She returns the favour and refers simpler clients that are basically busy work for her. The average on those is closer to $400.
Price yourself at what your feel your value is. I just finished a return that will be priced at over $800 because I feel that is the value of my services to prepare the return is. The client is truly amazed at the value and quality of the work on the return. To me, it felt like nothing. But this is what 27 years of experience, knowledge and confidence gets you.
I do high value returns, and I get paid well for doing them.
I also take that to my simpler returns. If you want somebody who has a good understanding of the tax act and can explain it to you in layman’s terms, and leave you with the confidence that your tax return is completed correctly the first time, or if you have questions and I can answer them at your level, the pricing has to reflect the value.
I agree that it is about the value proposition. It might take me just 10 minutes to do a tax return, but what about all my years of experience and education, the annual tax update seminars that I have always attended - the time of my staff to manage the flow of hundreds of tax returns in a short time frame, assembling, phoning, follow up for missing information, annual software costs, the pre-planning that goes into organizing each tax year. We start at $125, business & rental returns $225 with extra for bookkeeping. We do $85 for low income seniors and full time students. We only charge additional for slips if there is a huge amount . I think we sometimes behave as though our time is unlimited - I have a limited number of hours that I anticipate continuing to work (yearsxweeksxhours), that’s my business inventory - I want to charge a reasonable price, but I am not giving away my inventory any more than the guy that sells widgets is going to give me a widget for nothing.
I have experienced this year an “abuse” by customers bring or sending slips or change of information after the fact. I’m planning on charging for this next year. Any suggestions.?
Business Inventory = # hours/week x # weeks per year → great concept, never thought of time as inventory
My first job after university was for a tax preparation firm located in one of the department stores in Toronto. They charged $X for the return jacket + an additional amount if there were any taxes payable (before taxes withheld) + another 50% if there was a property tax credit schedule; then there were additional fees for every extra slip that had to go on a schedule. The client was usually in front of you, so none of this back and forth. The completed return was forwarded to the office for review and then sent back to the store for client pickup and payment.
After that the jobs were in public accounting, where everything was billed by the hour (with some write-downs by the partners).
I’ve been charging by the schedule for a few years now and am starting to embrace value billing. I do find that, especially this year with the pandemic, people are doing more back and forth, adding this and that, so the returns are taking longer to finalize (depleting my inventory as per the above). Rethinking the process for next year, as I now think that the back and forth process will stay with us.
We added a set amount to all our clients returns, and stopped charging for the 1st amendment about 7 years ago. Clients (even the ones who never have adjustments) love that the first one is free, and I get paid either way, so it works out.
If the “adjustment” was adding a whole business that wasn’t reported I’d probably let it slide once (if it was pretty simple), but not again.
If I did charge I would charge what I charge for doing a business form (on hours, or set charge, whatever your normal is), plus $50 for filing the amendment.
Actually the company was called EBS. At first I was at head office at Islington and Bloor, hardly any walk in customers and then, one Saturday as I was about to go home they called me to go to the downtown store - that’s where I did my first live tax return with the customer sitting affront me - in those days (1976) it was minimum wages plus a percentage of charges - after two seasons I thought if I charge $5.00 per tax return I would be making more money than working for them - and that’s what I did - 42 years later, I am still doing it…
Depends on how I feel… I charge $50 for uncomplicated adjustments, more where required, … and nil if respectful client for whom this is a once a in a lifetime error… the beauty of owning our own business.
this year, I have not had any such adjustments thus far… one person shop… focus on business and investment clients…but like all others have the family , friends, neighbours, etc.
Yes EBS - Electronic Business Systems or something similar?
Interesting. I was there in 1983. They were paying a 20% commission, with a minimum wage draw until the end of tax season when they paid out the balance. I got the more “complicated” returns since I had taken a tax course in university. The 3 busiest stores in Toronto at that time were: downtown, Yorkdale and Sherway. They paid you a 25% commission if you returned in future years.
The rest of you might be amused to hear that we were doing the tax returns manually, in pencil and using carbon paper:)
