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#21
novacpa  
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MWEA wrote:I had a referral call yesterday. “My guy retired last year and I’m looking for a new accountant. I would come in, he would input my documents, and I would walk out in 15 minutes with a filed return. What would you charge for something like that?”

I ask a few more questions: he has a consulting business, a taxable brokerage account with stock trades, Social Security, and wage income. None of it is difficult, but out the door and filed in 15 minutes? Not a chance.


Say, "I'm afraid of getting the Virus - just send me images of your tax docs - I will PayPal you for my work"
 

#22
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Thanks everyone for generously sharing your experience and wisdom!

Do you give your estimated fee upfront or it will be determined when the returns are completed?
 

#23
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cyberdom wrote:Do you give your estimated fee upfront or it will be determined when the returns are completed?


I give an 'estimated' fee up front based on what I know, but am clear that the fee will change if circumstances change.
~Captcook
 

#24
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cyberdom wrote:Thanks everyone for generously sharing your experience and wisdom!

Do you give your estimated fee upfront or it will be determined when the returns are completed?


We provide a "menu" list by the form, but make it clear that it's just an estimate. And some of our items, like Schedule C, have a price "range".
 

#25
CathysTaxes  
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I've been burned too many times with estimates.
Cathy
CathysTaxes
 

#26
ATSMAN  
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Do you give your estimated fee upfront or it will be determined when the returns are completed?


I do NOT provide any estimates without checking their prior return(s) and current year tax paperwork. If they can't supply that I throw out a figure that is at least 50% more than my average just to smoke out price shoppers.

Over the years I have found that serious prospects who are looking for quality of work rather the lowest price will be open to discuss with you their tax situation and show you their paperwork.
It is the low ballers who call all day long looking for a price and compare you to the guy down the street! I don't need clients like that. You can pretty much tell by the answers they give to your questions.
 

#27
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CathysTaxes wrote:I've been burned too many times with estimates.


That's why I say "no less than." I will not give out estimates unless I see their documents. If they want a ballpark, I give a wide range and say it is impossible to know without seeing their tax situation.

Had a guy the other day just price shopping. He did not like my minimum tax fee. That is precisely what I implemented it, to eliminate dealing with cheapskates that do not value my time.

I also do not want to progress with a prospective client if they will not show me their prior tax return so I can get an idea of what I may be dealing with...including prior year messes.
 

#28
jesella  
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ItDepends, thanks for sharing your treasure trove of a letter. I don't think you could get any clearer in your expectations. There are definitely some sections in there that we need to do a better job of communicating to our clients.
 

#29
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Agree jesella, thank you ItDepends.

My engagement letters cover a lot of the specifics you mentioned, but I am going to make a 2-3 page "new and returning client acknowledgements" template after busy season that I'm thinking is going to make dealing with a couple of my major pain points more bearable.

The template will be more general than the engagement letters and deal with expectations and put everyone on the same page regarding fees and how to keep fees as low as possible.
 

#30
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the types of new clients I avoid:

- some referrals from current clients or family/friends who somehow "have not filed taxes in several years" and actually have significant income/filing requirements. I automatically decline these bc, if they werent worried about the IRS and tax authorities, why would they worry about paying my fee or being cooperative? I have too many, easy going, organized clients to settle for Pain in the butt new clients.


- price shoppers

- refund shoppers

- generally annoying, bad attitude, types. - i regularly receive emails and phones calls from prospective new clients who start off as rude, demanding, and entitled. This 1 guy sent me 3 separate emails and called my office 3 separate times in a single day just to "talk to me for a couple of minutes about taking him on as a new client"

the guy was so annoying and pushy, that I did not bother to even look at his info, I just politely declined and told him we are not currently accepting new clients.

I've had prospective new clients basically harass me after declining their business, asking why I declined their business.



- I HATE to sound prejudiced against people in this situation, but New Clients who are going through a divorce , esp with children involved. No matter what, every time a client couple of ours goes through a divorce, our office feels the effects of their often negative/emotion filled experience. this means catching those clients on bad days, them going off on you from all the stress. Multiple phone calls from both spouses tying us into their arguments. etc.

I dont take the risk of taking on new clients who are going through divorce
 

#31
sjrcpa  
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For nonfilers, I get paid upfront if I accept them. Or I get a large retainer which they replenish as it is used up.
 

#32
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I had a call with a prospect earlier today.

I normally don't ask prospects what they're paying their current CPA but did today.

Prospect said he paid his current CPA around $250 last year. I accidentally chuckled and told him that he'd pay at least $750 with me based on what I've heard so far (and I haven't heard a lot). We end the call soon after that amicably by mutually agreeing we're not currently a good fit.

I think I'll start doing this with all prospects who currently have CPAs and are looking to change. It saved me the wasted time sending him a guest link to my portal, downloading his files, running the numbers, and emailing him a proposed fee only to be rejected.

Very efficient IMO to weed out those who are going to turn you down on price eventually.
 

#33
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Here's one I get all the time - what do you do with these...

"Hi. 4 years ago, my friend, who I really trust, told me I should be an s corp. So I went to Legal Zoom and set one up. For these 4 years, I paid myself $2000 a month"

([but what she means is that she took distributions - didnt run payroll]).

"I didn't file or pay any taxes in the last 4 years, can you help me file?"

As much as I prefer s corp clients over 1040 clients, I never take these. I send them a canned email saying that I'm not helping them, providing advice, they need to act quick, etc., and offer a few links to tax resolution services.

Am I the only one who doesn't touch these? Do any of you take these on and run back-payroll or do the Schedule C thing?
 

#34
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The prospect must acknowledge that they're going to pay a LOT in tax, penalties, and interest (failure-to-file penalties for an S Corp are not cheap). If they're not okay with this, move on. If they are okay with taking responsibility and accountability for four years of non-compliance, I would bill hourly and with a retainer. Once the retainer is depleted, works stops until the prospect makes another payment. If the prospect isn't okay with this, I'd move on. If I don't see the prospect sticking around and becoming a long-term client, I'd increase my rates accordingly. Some might frown upon this, but I'm not looking to have a lot of one-off, non-repeat engagements, so it has to be compelling for me. I learned this through experience.

I've had one or two of these prospects over the past 12 months. One couple needed three years of tax returns (a 1040, 1065, and 1120-S for each tax year). I told them it would be at least $8-9k. When they started getting wishy-washy over the fee, I walked. Not enough time in the day to entertain these types of prospects.

If you do engage, very first thing you'll want to do is confirm you're actually dealing with an S Corp. A lot of DIYers don't file the 2553.
 

#35
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ManVsTax wrote:I had a call with a prospect earlier today.

I normally don't ask prospects what they're paying their current CPA but did today.

Prospect said he paid his current CPA around $250 last year. I accidentally chuckled and told him that he'd pay at least $750 with me based on what I've heard so far (and I haven't heard a lot). We end the call soon after that amicably by mutually agreeing we're not currently a good fit.

I think I'll start doing this with all prospects who currently have CPAs and are looking to change. It saved me the wasted time sending him a guest link to my portal, downloading his files, running the numbers, and emailing him a proposed fee only to be rejected.

Very efficient IMO to weed out those who are going to turn you down on price eventually.


Had a call with a new client today. Spent 20min or so reviewing PY returns and talking through how I operate.
Noticed he paid around $300 and explained he'd pay around $800 with me...no hesitation.

You have to build a bit of value before expecting a prospect to swallow such an increase, but they can. I'd expect they would have gone elsewhere had I led with that.
Pointed out
~Captcook
 

#36
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That's valuable insight CaptCook. You're more measured than I am, and your thoughts are always appreciated.
 

#37
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Texas
AlexCPA wrote:I always ask for and review the income tax returns filed for the prior two tax years. Firstly, I'm assessing whether the potential client is sufficiently organized and tech-savvy to provide those documents electronically (my practice is 100% paperless). Secondly, I review the returns to ensure that the complexity and nature of the returns are within my wheelhouse and to spot any shenanigans which could increase risk associated with that prospect.

Recently, I reviewed the returns of a taxpayer who deducted almost $100,000 on Schedule C as wages to himself. No payroll was actually done -- they just deducted the wages. :shock: Needless to say, this was a no-go.

Another prospect took $80,000 in bonus depreciation on a truck in tax year 2017 and claimed 36,000 business miles in that year and 40,000 miles in tax year 2018 with about $500 in total revenue for both years combined. Thanks but no thanks. :lol:


How these returns are processed and pass the IRS? I saw crazy s**t like this in many returns and it drives me crazy how incompetent preparers fly with these returns and customers believe they give them "better refund"
 

#38
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I like to think they're going to get theirs in the end. No way returns like that aren't flagged in IRS computers.
 

#39
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ManVsTax wrote:I like to think they're going to get theirs in the end. No way returns like that aren't flagged in IRS computers.


This.

In the age of automation, the IRS will tighten up at some point and get smarter in the ways they spot these things.

The Gov can't do anything effectively until it comes to collecting money. Then all of a sudden they are Johnny-on-the-Spot.

It's coming.
 

#40
ATSMAN  
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Just ran into a red flag prospect yesterday. This was a referral from an existing client. He has not filed 2019 and received a IRS notice. Fellow shows up with 2020 W2, 1099-Nec, and 1099-G and nothing else. What happened to the IRS notice and 2019 filing? His friend who has a contact at the IRS is supposedly dealing with it and I need not worry. OK can I see past tax returns. Answer NO. I politely showed him the door!
 

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