How do you know when you are ready?

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#1
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In reading another thread, I read several of comments about not taking on cases that you are not capable of handling.

So my question is this...when do you know if you are capable?

In my simplest example, were any of us ready to prepare our first tax return? What about the first one with EIC? What about the first FBAR? There are always new forms, new challenges, etc. So how do you determine if you are ready to take on a new client with a new situation? How do you determine when to tell an old client that they are too complex?
 

#2
HowardS  
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If I haven't got the training, authority or experience I'll evaluate the cost/time vs expected future revenue. As an example, I've never prepared an estate 1041 and when I was approached last year for the first time, I referred the client to a local CPA I trust.
Retired, no salvage value.
 

#3
Frankly  
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The first time I did a 1041, and an FBAR I read all the forms and instructions and tons of other resources. I spent ten times as long to get it done as it would have taken an "expert". So what. The next one took less time. After that even less time.
 

#4
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That's my approach. I will research the heck out of something and it may take me way longer than someone else but it's how I learn. I am big into education so I constantly take classes on subjects I'm not proficient in but doing a return is way different than doing the CEU to learn it.
 

#5
makbo  
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Don't evaluate by yourself. If you work in a firm, ask a co-worker, otherwise ask a colleague you network with. As a last resort, ask here (with details). It's a case by case evaluation, obviously. Hopefully you can ask someone with more experience than you, as the answer will be more helpful.
 

#6
CathysTaxes  
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I did my first 1041 this year. A longtime client passed away and her heirs were also clients. I took CPE, did a lot of research, got the For Dummies book that covered 1041s, went through the TaxBook and of course, asked questions and used the yellow box on TA. I only needed to prepare the 706 so I could prepare the state 700 form (estate value was a little over 4 million). I learned a lot in this area. Since a lot of my clients are older with large portfolios, I believe this justified my investing all this time on my first 1041.

For the 1120S, I've decided I will only prepare these returns if I've done the bookkeeping and payroll. I had one client that did (and totally screwed up) his own records and I spent more time making adjusting entries and got burned.
Cathy
CathysTaxes
 

#7
CathysTaxes  
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sdodsoncpa wrote:In reading another thread, I read several of comments about not taking on cases that you are not capable of handling.

So my question is this...when do you know if you are capable?

In my simplest example, were any of us ready to prepare our first tax return? What about the first one with EIC? What about the first FBAR? There are always new forms, new challenges, etc. So how do you determine if you are ready to take on a new client with a new situation? How do you determine when to tell an old client that they are too complex?

You have to start somewhere. I purchase a block of CPE hours and then I look for new areas to explore.
Cathy
CathysTaxes
 

#8
dingus  
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makbo wrote:Don't evaluate by yourself. If you work in a firm, ask a co-worker, otherwise ask a colleague you network with. As a last resort, ask here (with details). It's a case by case evaluation, obviously. Hopefully you can ask someone with more experience than you, as the answer will be more helpful.


Yes, I have a good friend who has many many more years experience than I do...I run things by him as to whether or not I'm "ready" to handle something and he's there if I get stuck. It's been one of the most invaluable resources to both the growth of the firm and my own professional growth.
 

#9
kathyt  
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I research the heck out of it, read the instructions, if I'm unsure I will ask people on this board if there are specific questions I have. I use checkpoint learning for most of my cpe, it has tons of courses available & I can take however many courses I want to for one price (I think it's somewhere between 300-400 a year), some are webinars some are self study, so I can take the course almost any time I need to. So when I come across something I have never done before, I will take enough courses on the matter until I feel comfortable, read the instructions, and ask what ever other questions I have to you kind folks.
 

#10
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I am a visual learner. I need a webinar or seminar to really help 'get it'. I have trouble finding webinars on demand. I like Sergent McCoy but they are live webinars with no replay. Anyone have a good source for on demand webinars with some 'meat' to them. I need the intermediate to advanced issues.
 

#11
Coddington  
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One way to learn how to do something is to outsource it and then slowly bring it in house as you get more comfortable. In terms of my own business, there are plenty of CPAs who are not comfortable setting up a UNICAP calculation, because it doesn't affect their clients. All of sudden, a retail client crosses the $10 million average gross receipts threshold. So the CPA pays me to file the method change, set up a calculation for the affected client, and teach them how to maintain it based on the current law. Then, maybe, I get an hour or two of review time in the second year, and maybe nothing afterwards until the law changes or the client's business changes. Maybe the CPA never gets comfortable and I have to do it every year.

The only problem to this model is finding people willing to do this kind of arrangement. Tax attorneys might do the one-off project, but I don't know if they'd help you much going forward without wanting the whole enchilada.
-Brian

Director of Tax Accounting Methods & Credits
SourceAdvisors.com

Opinions my own.
 

#12
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That's a good point! I have found a few CPAs not in my territory willing to do some canadian stuff for me while helping me grasp it. I also found one willing to teach about CFC subpart F income. All in all we are a helpful industry
 

#13
dingus  
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Coddington wrote:One way to learn how to do something is to outsource it and then slowly bring it in house as you get more comfortable. In terms of my own business, there are plenty of CPAs who are not comfortable setting up a UNICAP calculation, because it doesn't affect their clients. All of sudden, a retail client crosses the $10 million average gross receipts threshold. So the CPA pays me to file the method change, set up a calculation for the affected client, and teach them how to maintain it based on the current law. Then, maybe, I get an hour or two of review time in the second year, and maybe nothing afterwards until the law changes or the client's business changes. Maybe the CPA never gets comfortable and I have to do it every year.

The only problem to this model is finding people willing to do this kind of arrangement. Tax attorneys might do the one-off project, but I don't know if they'd help you much going forward without wanting the whole enchilada.


Yeah, that's a really good point. I've learned a lot from the few times I've done that, and other CPA's are usually really happy to do it.
 

#14
SaraEA  
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Another thing to think about is the consequence to the client if you are in over your head and mess up. Sure, we can all read the pubs and take some CPEs and figure out how to do an estate 1041 or 706 (and hopefully have someone more experienced review it with you and teach you along the way). Some partnerships are no more complicated than a Sch C, others are insane with loans back and forth and contributed property. The pubs won't help much, and these tricks partners use are exactly why the rules are so complex. The IRS is looking for the games partners play. If you can't even grasp the situation, it's best to refer these clients to someone who specializes.

Thinking back, the clients I have declined mostly had foreign tax issues. One was opening a branch in a foreign country and hiring a foreign employee (I didn't want to get into that country's equivalent of Social Security tax). Another was trying to help a resident alien open a foreign trust. The various tax treaties are boggling. If you mess up on a 1041 or 1120, the worst that can happen is the client will owe more tax. Mess up on one of these foreign things and the client can be deported.
 

#15
smtcpa  
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I think this is a great idea and an idea I have been formulating over the last few years. I think the industry is going to become more specialized, like the medical profession. Each practitioner will have their own area of expertise and have non-competitive "partners" they can outsource the work they are unfamiliar with. I'm willing to discuss this concept in more detail. But to the OP's question, I would focus on those areas you know well. I'm starting to finally realize I don't need to know everything. I gladly give up trust and estate work, and now I'm doing the same with IRS representation work as well. For me I knew I was ready when I reviewed prior year returns prepared by other tax people and started seeing mistakes.

Coddington wrote:
The only problem to this model is finding people willing to do this kind of arrangement. Tax attorneys might do the one-off project, but I don't know if they'd help you much going forward without wanting the whole enchilada.
 

#16
HowardS  
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If you want to specialize, you may consider an internship or apprenticeship if you can find one. A dozen years ago a local attorney was looking for someone to prepare trust and estate returns. I interviewed, he wanted to hire me but pay only $18/hr, so I turned it down. I regret passing on the opportunity to learn. I could have been Dennis 2!
Retired, no salvage value.
 


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