What are you charging for 1120s, 1065?

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#1
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I'm thinking of raising our fees for these.

Right now, an EZ starts at $550 (gross receipts <$500k, clean/simple p&l and bs, no book work required at all on our behalf, simple shareholders, already established reasonable salary. etc)

This includes 1 state return and no apportionment.

From there we bump to $850, $1250, and $1800. Still no books for those rates.

95% of our returns are the EZ ones. Like a food caterer with an 1120s single owner/employee, or a 1065 with one rental.

I'm an EA, not a CPA.
 

#2
ATSMAN  
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Go ahead raise your fees in HI. It is a very expensive state!

Hawaii ranges between $1083 to $1250 average! More than any western state.
 

#3
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I live in an expensive and wealthy area and it varies greatly. They typically start at $600 and go up to about $3k. Partnerships tend to be costlier...their records are typically a mess and they rarely do things correctly.
 

#4
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We do a full working trial balance for every entity return even if no Schedule L is required. So we tell clients if your records are clean, you are looking at a minimum S Corp of $2,500 and if the records are not clean it is not unusual to charge $5k - $6k. Most clients do not bat an eye.

For a simple real estate LLC with say two partners, the 1065 might be $1,500 to $2,000. Again we do a full working trial balance

I am not sure if it is a regional thing, but virtually all operating companies operate as an S Corp. We see very few companies set up as a partnership or multimember LLC.

When I see those average prices for 1120S, I assumed that many were entering the info just like a Schedule C and only using the P&L figures from Quickbooks, etc.
 

#5
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Our base minimum fees are $1600 for 1120. 1120 S 1065 and go up based on books, depreciation etc.
 

#6
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BerkshireCPA wrote:
When I see those average prices for 1120S, I assumed that many were entering the info just like a Schedule C and only using the P&L figures from Quickbooks, etc.


Yes, that's what we do. Strictly tax preparation. Most are single owner/operators like AC installation guys, for example. They provide a P&L, payroll data for the owner's services, and an ending bank balance and that's really all there is to it. We refer away most returns with more than $500,000 in gross sales.

The returns take 15 minutes to complete (though we spend much more time with the client for several obvious reasons related to tax and s corporation compliance).

If we're doing their payroll or books, that's different.
 

#7
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southparkcpa wrote:Our base minimum fees are $1600 for 1120. 1120 S 1065 and go up based on books, depreciation etc.


How complicated, on average, are these base $1600 returns?
 

#8
ATSMAN  
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I don't do any trial balance unless Sch L is required. I have only one that needs that and his bookkeeper (wife) is good and keeping track of thinks so we have a good working relationship.
 

#9
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CornerstoneCPA wrote:
southparkcpa wrote:Our base minimum fees are $1600 for 1120. 1120 S 1065 and go up based on books, depreciation etc.


How complicated, on average, are these base $1600 returns?


Normally not very...... it’s just the price I set to keep the client quality higher.
 

#10
novacpa  
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If the client has under $250 gross/receipts - single entry accounting is acceptable. Big time savings - 1120s & state return (if the chart of accounts is condensed so the grouping of account is straight forward) the work is similar to that of a Sch C.
Hard part is charging the same amount and getting it. Quoting $750/$950 1120s - I never get fee resistance.
Getting that for a Schedule C, well a different story. Again for small operators some under $100k in gross receipts.
 

#11
ATSMAN  
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I think you will agree with me that the "quality" and timeliness of records provided to prepare any tax return makes all the difference in pricing. So while the published prices for a return type may be national or zonal averages, it is not what we can base our ultimate price for doing the work.

I have always maintained and tell new clients that they can help me and themselves to keep the prices reasonable by providing the records in a way that I ask and timely.

I have clients who heed this advise and do what I request and other who could care less but then I charge them accordingly. I keep track of the time I or my assistant spend on a return and that will be a key factor in the final bill.

I used to have clients with the proverbial brown bag full of receipts in my early days. But over time I have either weaned them out or disengaged :twisted:
 

#12
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Whenever providing estimates of cost for entity returns, I make it clear that this is the cost for preparing the return and NOT for the bookkeeping to support the numbers (save, obvious entries like depreciation). There is enough work that goes into reviewing information for proper tax treatment that cost will rise quickly if the debits and credits aren't in the right spot.
The most key part of this dynamic and keeping pricing appropriately categorized between tax prep and bookkeeping is to push records back to the client when it's discovered they are out of line. This starts a conversation that helps them to recognize where the bookkeeping issue is, but also draws a line in the sand where you can bill bookkeeping separately and maintain a high value price on the tax prep portion of your work.
~Captcook
 

#13
fish  
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CaptCook wrote:Whenever providing estimates of cost for entity returns, I make it clear that this is the cost for preparing the return and NOT for the bookkeeping to support the numbers (save, obvious entries like depreciation). There is enough work that goes into reviewing information for proper tax treatment that cost will rise quickly if the debits and credits aren't in the right spot.
The most key part of this dynamic and keeping pricing appropriately categorized between tax prep and bookkeeping is to push records back to the client when it's discovered they are out of line. This starts a conversation that helps them to recognize where the bookkeeping issue is, but also draws a line in the sand where you can bill bookkeeping separately and maintain a high value price on the tax prep portion of your work.


What does this actually mean in practice? How do you distinguish between tax prep and bookkeeping? Does tax prep become purely the mechanical process of typing the numbers into your tax software? And everything else - reviewing the client's bad worksheet that he typed into Word instead of Excel; pulling apart the $50,000 of expenses grouped under "business expense" into the various categories you want to list on the tax return; trying to figure out how he has some number for salaries that doesn't come close to matching what's on the W3 and 941s... all of that is bookkeeping?

And then how do you bill for that bookkeeping work? Is it a hourly charge? a charge based on the number of transactions?

Do you then say to the client.. . I bill a flat fee of $xxxx for the preparation of your return, and i bill an hourly rate of $yyy for the bookkeeping work which includes reviewing the books, classifying and categorizing expenses, and reconciling payroll accounts. So if you want to keep your fee down, you should pull together an income statement using the categories I've laid out here on this attached excel worksheet, making sure you've reconciled your salary and payroll tax accounts to your payroll tax reports.....
 

#14
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briandaviscpa wrote:What does this actually mean in practice? How do you distinguish between tax prep and bookkeeping?


In my experience, the exercise of articulating this to the client is enough to start a productive conversation.
Think of the clients you have with clean books. What do you charge them? How is that different from the one with 27 AJEs and constant back and forth about missing/incomplete/inconsistent information?
I think that answer will be different for everyone, but letting a client think that your cost for preparing tax returns includes a TON of bookkeeping needs to be addressed, if that's the case.
~Captcook
 

#15
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southparkcpa wrote:
CornerstoneCPA wrote:
southparkcpa wrote:Our base minimum fees are $1600 for 1120. 1120 S 1065 and go up based on books, depreciation etc.


How complicated, on average, are these base $1600 returns?


Normally not very...... it’s just the price I set to keep the client quality higher.


I am in the same price range. And I also charge for bookkeeping by hours. That would be a much lower rate at $75 per hour. I do not really want to do bookkeeping work but sometimes that is needed to get started with the returns.

Am I charging too low for bookkeppiing?
 

#16
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CaptCook wrote:
briandaviscpa wrote:What does this actually mean in practice? How do you distinguish between tax prep and bookkeeping?


[b]In my experience, the exercise of articulating this to the client is enough to start a productive conversation. [/b]
Think of the clients you have with clean books. What do you charge them? How is that different from the one with 27 AJEs and constant back and forth about missing/incomplete/inconsistent information?
I think that answer will be different for everyone, but letting a client think that your cost for preparing tax returns includes a TON of bookkeeping needs to be addressed, if that's the case.


You are correct. I think we all have that "ideal tax return" preparation situation, where the backup records are provided exactly the way we want and completing the tax return is relatively easy plugging the figures in the right place on the form with minimal manipulation.

I have been providing checklists and organizers to those clients who are always a problem and after a while if I don't see the results that I want, it is time for additional charge or disengagement.

For example, right now I am dealing with a new client that completely screwed up the records for preparing the 2quarter form 941. I have to go through each payroll entry to complete 941 and that will cost him additional money and he knows it but blames it on a new office manager!
 

#17
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"Am I charging too low for bookkeppiing?"


I do not charge by the hour, rather my objective is to charge as much as possible on each engagement. I would not consider what you are doing as bookkeeping but rather "year end work". Some people might argue it is bookkeeping but as a CPA with over 30 years experience working at a small firm and being hands on I figure I am better and more knowledgeable than 99.9% of bookkeepers. So what is a fair rate for a bookkeeper in the top .1% , probably about the same rate we use on our internal practice management software of $265 for my year end work.
 

#18
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cyberdom wrote:
I am in the same price range. And I also charge for bookkeeping by hours. That would be a much lower rate at $75 per hour. I do not really want to do bookkeeping work but sometimes that is needed to get started with the returns.

Am I charging too low for bookkeppiing?


oh oh oh oh pick me pick me pick me... i know the answer to this one!!!

Yes. :D

If you could do something else - prepare a tax return, a tax projection, something - and it would take you one hour and you would bill $600 for it (even if you don't bill by the hour because you value bill you can still measure an effective hourly rate) then you definitely shouldn't bill just $75 for bookkeeping. Especially if you don't even want to do bookkeeping.

I don't know what that rate should be, but i know it should be more than $75/hour.
 

#19
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^^ I agree with that...




FYI, if it helps anyone - when we give a quote for ANY tax return we include:



Our tax preparation services and prices do not include bookkeeping services.

We will not extract, interpret, sum, or merge data from receipts, ledgers, bank statements, emails, or other documents that are not official tax forms. Our clients must instead provide completed financial statements or completed organizers/questionnaires which we can provide, if needed. We charge hourly for those who need extra time and attention.

If new data needs to be included, a new and updated organizer or P&L must be provided.
We will depend on you to provide the information we need to prepare complete and accurate returns. We may ask you to clarify some items but will not audit or otherwise verify the data you submit.


[it's also in our engagement agreement]
 

#20
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Cyberdom - I also believe you are undercharging for your bookkeeping. I'm an EA in the Tampa area and do sub-work for a CPA. No taxes...just monthly/quarterly bookkeeping and year end cleanup for tax prep. He bills me out at $75-$125/hr and pays me $45/hr. I work from home and provide my own computer and QB. (I could probably charge him more but am semi-retired and like having something to do.) I'm fast and chase the answers from the clients. All the CPA has to do for taxes is key numbers.
NYC is much more expensive than Tampa. Maybe see what your peers in NYC are charging
 


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