Qualifying and Onboarding New Clients

I'm curious to know how some of you handle potential new customers when they call. I often run into situations where the actual tax return is not as "simple" as the client initially suggests.

Do you run through some basic questions with them verbally first and then quote them a price? Do you send them a tax organizer (even if just an abbreviated one) to get a picture of what they need and then quote them?

I'm interested in hearing what has worked for you and what hasn't.

I ask questions; tell them our minimum fee; give an estimate of what I think the fee will be.
I try to get a copy of last year's return before I give an estimate.

Many times a new client will present a set of facts to give the impression the return is "simple" to lock the Preparer
into a price quote that is low. Only to find when actually preparing the return, that there is much more work.
I prefer to give a long range i.e. $350 to $850. Qualify the range - if I find more work, the price will be on the higher end.

I've learned some pretty simple questions to ask to ascertain how involved a tax return may be, but I throw out my minimum fee, my minimum fee for each additional state that may be required, and have started asking for prior two year tax returns. So far I have not really been caught by surprise.

About 25% of new clients will admit their tax returns have become more complicated. 75% still overestimate the simplicity.

Common questions I ask:

-Do you own a business? If so, what type and how many?
-Do you have any rental properties?
-Do you itemize or take standard deduction?
-Do you have investments? If so, how many pages are your brokerage statements and how many K1s if invested in public partnerships?
-Pensions?
-Own any real estate? How many mortgages, if any?
-Did you sell any assets during the year, including business interests, real estate holdings, investments, etc.? Did you acquire any of these?

Its the murky ones, like new client locks in Preparer to a fixed price only to find when viewing the W2s - he's withheld in 3-states!! That was not discussed during pricing.
Or, when e-filing a red notice comes up "return rejected Code___", to find the new client dependent is being claimed by his former wife and he's really MFS. Again, never discussed during pricing.

I have a two step process.

Using 2020 as an example: First, I hope on a short call to figure out what what their 2020 looks like compared to 2019. Then I request a copy of their 2019 income tax returns.

After I've had a chance to review their returns and crunch the numbers, I issue a ballpark quote via email with the caveat that the fee is based on what was conveyed to me during the call (I list the high level points in the email) and if there are material differences, or I'm missing something, the fee will need to be adjusted.

Most of the time the fee ends up being exactly what I quoted. The client is happy. I'm happy.

When a prospect client tells me "simple" on a call or email, it's a slight flag in my eyes. What they're really trying to convey is: don't use your brain, just give me a low quote.

It's one of those words that doesn't always mean to the prospect what it means to you. Kind of like "aggressive".

Currently I only deal with referrals so it makes it a little easier because I am NOT competing to be the cheapest tax preparer.

I will do a tele conference or a quick 20 minutes in office meeting (before COVID) and I ask them to bring their previous 3 years tax returns (I will settle for 2 most of the times).

I ask the same questions that others have posted.

If the prospect is too focused on price, I know it is not the right fit. I politely refuse engagement if they ask for one or I simply thank them for their time.

One time I had the owner of a janitorial service company show me the quotes he received from three or four accountants and asked me to match it. Told him this is not a used car lot, please go elsewhere.

I’ve come to learn that any time someone uses the word “simple” it’s code word for I’m not willing to pay much.

I’ve come to learn that any time someone uses the word “simple” it’s code word for I’m not willing to pay much.

A good response would be that I don't do simple returns. Try Turbotax.

A good response would be that I don't do simple returns. Try Turbotax.

I tell this to quite a few people. I think they're often surprised by it, but I never compete on price and will not be haggled down.

I'm curious to know how some of you handle potential new customers when they call. I often run into situations where the actual tax return is not as "simple" as the client initially suggests.

Do you run through some basic questions with them verbally first and then quote them a price? Do you send them a tax organizer (even if just an abbreviated one) to get a picture of what they need and then quote them?

I'm interested in hearing what has worked for you and what hasn't.

For me, worst potential clients are the prior year DIY. They have never paid and may not understand value.

That said.. I always ask, what was it that makes you want to leave your previous CPA?

What did he charge you?

That, added to great comments above, is a start.

For me, worst potential clients are the prior year DIY. They have never paid and may not understand value.

Correct BUT if they ever received a tax notice and they are contacting you that is a very good way for you to demonstrate your value. I had a college educated lady who screwed up and after I prepared her tax return for the first time she herself said "I would rather pay someone to do this for me." She even joked that she does not fix her own car!

My favorite ones are the ones that come in with a notice for a few thousand that I'm able to turn into an amended return with a refund of a few thousand.

"I should have gotten a CPA years ago" is what they usually say.

Yeah bud, tell your friends about me.

That said.. I always ask, what was it that makes you want to leave your previous CPA?

What did he charge you?

If I find out they had used a local CPA, typically them naming the CPA tells me all I need to know. I know quite well how most local CPAs operate and it tells me enough to know whether it is the client or the CPA that created the problem.

Obviously this does not apply to prospective clients switching from out-of-state CPAs, but they also typically tell me why they are looking for a new CPA without me having to ask. Typically, if have to ask why they are changing CPAs, that is a FANTASTIC indicator that the client has been the issue, not the CPA.

And yes, if a client is not willing to tell me what their prior tax preparer had been charging them, it is also a red flag to me that they are price shopping. It applies about 90% of the time in my experience--the other 10% just tend to be strange people that still pay their bills without hesitation.