Leverage form employees (or the lack thereof)

I have 4 employees on the clock right now.

My manager is invaluable - I don't resent her being here.

The other 3 - nothing to do. Bored.

Me? Slammed and over-saturated with things to do and about 80 items on my queue - most of them creeping into unacceptable response times. I'm sure you know how I feel.

This is not a complaint, by the way, it's just an observation.

I can't seem to teach the others to relieve me of the work I have to do, no matter how much time I spend training them.

They still require more time from me to complete things than as if I just did them myself, regardless of the training time investment.

I would admit my own shortcomings, but being a trainer is not one of them. I'm pretty good at it - still, I fail.

I'm ready to give up on the concept of leverage for the most part (I'll keep the office manager and a part-time receptionist) and just do everything myself.

Am I the only one who feels this way?

What am I doing wrong?

Should I be busting my butt - right now - all day - -and have the money flow just to pay the employees?

Feels like I'm doing it wrong.

Regardless of your business model going forward, you have 3 employees who aren't worth what you pay. Why would you keep them on? I'd lay them off, today.

I can't seem to teach the others to relieve me of the work I have to do, no matter how much time I spend training hem.

They still require more time from me to complete them than as if I just did them myself, regardless of the training time investment.

I'm ready to give up on the concept of leverage for the most part (I'll keep the office manager and a part-time receptionist) and just do everything myself.

Absolutely the way I feel. I came from the corporate world, where I had staff to train & manage. When my company was bought out, and I went back into private tax practice, I decided to keep it just me. Hubby decided he feels the same way with his law practice. We only have the secretary - that's it.

I had 3 employees and me, we billed out about 550K, I netted say 250, back in 2010.

I now have just me and one awesome assistant. We bill out 375 plus and the workload is as you can see down 25 percent,

I highly recommend it. Fire your worst 20 percent clients, let an employee go. RAISE your prices 10 percent and a few more clients will leave.

I haven’t worked more than 2 Saturday’s in 5 years and I leave the office at 1pm on Fridays in tax season and never work Fridays from 4/15 to 1/15.

HIGHLY recommend it. It took balls, but I saw myself dying of stress. I now make more money, Work less, enjoy my clients much more. My assistant, an EA, make about 100K. She leaves on Fridays at 1pm all year.

GOOD LUCK!!!! Google Strategic Coach. I did their 3 year program. very expensive. Changed my life.

I

have 4 employees on the clock right now.

My manager is invaluable - I don't resent her being here.

The other 3 - nothing to do. Bored.

Me? Slammed and over-saturated with things to do and about 80 items on my queue - most of them creeping into unacceptable response times. I'm sure you know how I feel.

I have seen this happen at places that I have worked before. IMHO this happens because of poor resource management by the Boss. If the 3 employees can't pull their load, then either you hired the wrong people or you need to downsize.

I was working at a place where one junior accountant was hired simply because he was a relative of the boss and all he did was flirt with the ladies in the office. That lasted about half a tax season until, he was let go because of unethical behavior.

If the 3 employees can't pull their load, then either you hired the wrong people

Nah

or you need to downsize.

Nah

poor resource management by the Boss.

Bingo

I decided to keep it just me. Hubby decided he feels the same way with his law practice. We only have the secretary - that's it.

I get it. Leaning toward this now. Thinking of just keeping the manager (the manager does bookkeeping for a few clients, pre-prepares the 1040 tax returns, handles 90% of client questions, and perhaps too many other things to list) and a receptionist.

Fire your worst 20 percent clients

Planning to fire the worst 10%, anyway...and

RAISE your prices 10 percent and a few more clients will leave.

Our prices were average, and I'm raising them 25%. Scary, but need to do it. We are a very responsive, conscientious, and caring practitioner's office. We are in an area with high demand and an extremely low supply of responsive preparers.

I haven’t worked more than 2 Saturday’s in 5 years and I leave the office at 1pm on Fridays in tax season and never work Fridays from 4/15 to 1/15.

Wow! How do you do this and still gross so much in billing? Do you do a lot of bookkeeping/accounting?

Strategic Coach

Without paying $XX,XXX for an analysis, I can already see that I can make more with different types of clients (s corporations that need payroll and sales tax help - with a little bit of bookkeeping mixed in) and the reduced staffing mentioned above.

Should I still pay 5 digits (I'm guessing) for someone to show me this? Was it THAT mind-blowing? (serious question - maybe I'll do it).

If the 3 employees can't pull their load, then either you hired the wrong people

Nah

or you need to downsize.

Nah

poor resource management by the Boss.

Bingo

I decided to keep it just me. Hubby decided he feels the same way with his law practice. We only have the secretary - that's it.

I get it. Leaning toward this now. Thinking of just keeping the manager (the manager does bookkeeping for a few clients, pre-prepares the 1040 tax returns, handles 90% of client questions, and perhaps too many other things to list) and a receptionist.

Fire your worst 20 percent clients

Planning to fire the worst 10%, anyway...and

RAISE your prices 10 percent and a few more clients will leave.

Our prices were average, and I'm raising them 25%. Scary, but need to do it. We are a very responsive, conscientious, and caring practitioner's office. We are in an area with high demand and an extremely low supply of responsive preparers.

I haven’t worked more than 2 Saturday’s in 5 years and I leave the office at 1pm on Fridays in tax season and never work Fridays from 4/15 to 1/15.

Wow! How do you do this and still gross so much in billing? Do you do a lot of bookkeeping/accounting?

Strategic Coach

Without paying $XX,XXX for an analysis, I can already see that I can make more with different types of clients (s corporations that need payroll and sales tax help - with a little bit of bookkeeping mixed in) and the reduced staffing mentioned above.

Should I still pay 5 digits (I'm guessing) for someone to show me this? Was it THAT mind-blowing? (serious question - maybe I'll do it).

too complex for here... PM me and I’d be happy to discuss over phone or Skype etc.

Our prices were average, and I'm raising them 25%. Scary, but need to do it. We are a very responsive, conscientious, and caring practitioner's office. We are in an area with high demand and an extremely low supply of responsive preparers.

Good for you. I've seen you post your fees before and was pretty surprised they were what they were based on your location.

My fees are materially higher and I'm in a lower cost of living area. You'll want to explain the reason for the increases in a logical and calm manner, and it is an opportunity to get rid of problem or difficult clients.

Our prices were average, and I'm raising them 25%. Scary, but need to do it. We are a very responsive, conscientious, and caring practitioner's office. We are in an area with high demand and an extremely low supply of responsive preparers.

Good for you. I've seen you post your fees before and was pretty surprised they were what they were based on your location.

My fees are materially higher and I'm in a lower cost of living area. You'll want to explain the reason for the increases in a logical and calm manner, and it is an opportunity to get rid of problem or difficult clients.

Our fees:

FYI, our tax preparation prices are VERY "ala carte". For these prices, we will not merge or sum up ANY expenses. Organizers must be completed or a P&L must be provided. This includes things like charity, medical expenses, rental expenses, etc - not just business. We do offer adding up expenses for clients, but we bill about $300 per hour. We are very strict about this.

Audit representation not included - also an hourly fee.

Also note we are an EA firm, not a CPA firm.

Married, dependents, Schedule A with one state = $350

Additional forms:

Additional states = $90 each
Schedule C to include estimated taxes = $350 (each) - [so a MFJ with kids and a business would be $700 - throw a rental on there, and its $810]
Rental property = $110 each
Schedule D = $40 to $180 depending on complexity. (sale of a rental would be $180 for 4797)
Solar credits federal and state = $90
EIC = $100 (not too many of these)

These things really add up quickly - do you still think we are too cheap?

Also:

Simple 1041 from $450
Simple 1120s or 1065 from $600

1120s, 1040, and payroll services for s corp owner/employee $3000 (does not include books or sales tax filings)

Yes I think you are too cheap.
$300 an hour for addition-but I do not think you're getting $300 an hour for tax return prep.

Also note we are an EA firm, not a CPA firm.

Don't worry about the letters behind your name. Focus on the value and client experience you provide, and bill appropriately.

I know one or two EAs who put 95% of CPAs to shame.

These things really add up quickly - do you still think we are too cheap?

Yes.

I routinely charge $200 for each additional state return. It takes time to learn the state's tax return and research certain state specific treatment that I don't keep current on as much as my own state.

Other than that, it's hard to compare as I don't do a la carte pricing.

My only suggestion would be to learn more about value pricing and incorporate that. i.e. if you are knowledgeable in a niche area, and you found a way to reduce a client's tax liability $1k, $5k, $10k, etc vs the average preparer, should you be charging by form like your services are a commodity? Probably not.

Example: you implement a strategy that will reduce a client's tax liability by $10k this year. You would normally charge $1,000 to prepare this client's return. I would argue that you should charge $2,000, and that's what I would do, but I am comfortable having that conversation with the client about why I'm charging that, the value I'm providing, and how much he/she is saving in taxes this year with me. The client might not like it at first, but after my conversation they will understand and respect me more. At least, that's my experience. Food for thought...

Your client base might be very different than mine too so maybe take it with a grain of salt, unless you are repositioning.

I have no EIC returns, nor would I consider them, unless it's the adult child of a client or something. That's not really my target demographic.

Unless you are familiar with the state tax laws, it is generally more time consuming to prepare the state return if there are differences between the Federal and state tax treatment of certain deductions/credits. My state is notorious for having such differences.

I have declined engagements where the additional state return is something I am not familiar with. I just don't have the time during busy tax season to learn another state law for those one off returns.

It sounds like you're on the right track on a lot of this. Add me to the majority that agrees that obviously your staffing is not in line with your needs. How you skin that cat is up to you. That said:

Additional states = $90 each

This, to me, is glaring. I have an ala carte style pricing system which I use as a guide but if a 1040/A/state return is $350, $90 for an additional state is undercharging. Also, you're charging the same for a North Dakota return as you charge for a California return, which is... not ideal.