Question for BHoffman about billing

[Skate1968]

BHoffman,

First I'd like to thank you again for sharing so much information with me. It's very helpful.

These are things that I consider when estimating fees. Unless the books are really good, I might charge around $500 - $700 per month for write up on MY software, not his, and I'll provide Management Use Only financial statements. I refuse to prepare payroll and refer clients to a good payroll preparer - noting that my fees are much higher than a specialist. I might charge a minimum of $500 for the Corp Fed return and $150 per state return. I also charge $100 per hour for work not specifically identified on my Engagement Letter. Can't stress the importance of that Letter.

I'm flexible. I'll discount fees or even lower the monthly fee if the client is trainable and becomes easier to work with or refers me to lots of really good clients. It's easier to discount than to raise fees. That's important to remember.

When you state 500 dollar minimum for a 1120 do you mean 500 dollars assuming the books are in near perfect order and don't require adjustments? I ask because i generally include such adjustments as included in my fee for the 1120 prep. Do you charge 500 base and then extra for the adjustments?

And if anyone else wishes to volunteer any information, please do so.

thanks

[BHoffman]

Back from Vacation

Hi Skate - I offer both accounting and tax services, and sometimes treat those services as separate engagements especially if there is a lot of accounting involved.

Sometimes I charge separately for accounting to close the books in late January (say, $1200 because they never reconciled the bank account) and I'll want payment for that before I start any tax prep. Sometimes half before I start and half when I finish. Then I'll prepare the tax return in mid February and charge for tax prep (say $500) at that time. That way I'm not so much at risk and the client isn't presented with a truly enormous bill all at once. I always try to give the client an estimate of fees before I start any work. I find that if I don't surprise the client with an unexpectedly large invoice, they don't surprise me by not paying.

I discount if the books are perfect or if the company is really small. I'll usually note the reason for the discount "Paperwork in good order" or "Small corporation discount" or "First return discount". Something like that to leave the door open for fee increases next year if they grow larger, more complex, or sloppier. I'll also discount if they've been a good source of referrals. I do not like to charge according to a client's ability to pay, but I have done that and am surely not alone.

I set my base fees pretty high and look for reasons to discount. It is easier to discount your fees than to raise them.

[Skate1968]

Thanks very much, BHoffman, for fully answering my question in detail. You've touched on many issues which i should be mindful of.