1120 S? What should I charge?

[Super Mom]

I've never done an 1120S before, I think I'll have a couple soon as I just took on a new bookkeeping client that's an S Corp. I'm a certified bookkeeper with the AIPB and I'm currently taking a course on 1120S preperation, I know my learning curve will be huge but I have no idea what to charge. I have done a 1065 with Schedules L and M and the 1120S appears very similar. Should my charge be the same as for the 1065?

If anyone gives me an amount they charge, please tell me what you charge for a regular return--no extra schedules or forms---state and federal, and specify paper or e-file please so I can see how my rates compare to yours in my calculation.

Thanks so much!!!!!!

[Gretel]

I tend to charge a little more for a 1065 than for a 1120S. Same if they are very simple. Partnership law is more complicated than corporation law as far as real small biz is concerned.

[dsi]

Supermom, I guess it really depends on where you are located, and what the market will allow you to charge. Here in CA, my minimum fee for the simplest, most straight forward 1065, 1120, 1120-S, 1041 is $700. It goes up from there. I've charged as much as $12,500 for an 1120-S. A CPA friend of mine who practices in the Newport Beach area told me his firm charges a minimum of $700 or 1% of the client's gross revenue, whichever is greater.

[taxxcpa]

Pricing

A very small S-Corp does not require a balance sheet, so it could take less than 30 minutes to do it. A larger job could take several days, but some have a set of books with almost every account like the accounts on the tax return so they too could be done quickly.

If there are hundreds of items to depreciate and several K-1s, etc., then the time could be extensive. The best way to judge is by the time it takes. If you charge around $ 100 per hour, then your fee might vary from $ 100 to $5000.

[Roberts]

Yes I totally agree that it depends on the type of business and the amount of work required. I also try and do it strictly as an hourly issue because once you get involved, you might find problems in the accounting and an unreasonable expectation that every problem or issue needs to be reviewed by you. I have an 1120S who now calls me up for all of his computer problems! If he's willing to pay me $120 per hour to download and install Mozilla, I'm fine with that.

I would interview them, determine a rough estimate of the time and give them a cap. Personally I'm not comfortable with charging for your training period - you should be a professional so they shouldn't be paying for your training.

[JohnH]

I start out with a stated base charge of $900 for any S-corp return. This includes Fed & State return, NC annual report, and up to 2 K-1's. Additional K-1's are $100 each. Hourly charges for preparing the info to enter on the return are added as needed.

Having said that, there are a few situations in which the preparatory work is fairly simple and the 1120S isn't much more complicated than a Schedule C, especially when a balance sheet isn't required. (I still do the balance sheet work but don't bother to enter it on the 1120S). In those cases I may discount the 1120S down to something less than $900. I've discounted as low as $480, but that's my bare minimum, and that would only be for someone who is also a profitable 1040 client.

Generally, I've learned that it's much easier to have a high stated rate and then discount down as appropriate than to try and work up from an accidental but well-intentioned low-ball estimate. Too bad I learned it late in life after having spent all these years agonizing over a "fair fee" concept that most clients don't pay any attention to anyhow.

For a stand-alone 1120S (no 1040 or other client relationship), I can't think of any reason to discount. That type of preparation would start at $900 and go up, even for the simplest of S-corp returns.

[dsi]

As pointed out, a small s-corp doesn't require a balance sheet. However, by maintaining one, it saves a lot of trouble for the client further down the road. I always complete the balance sheet and keep track of each shareholders basis, both inside and outside basis if they are my clients.

[JohnH]

Yes, I agree that the balance sheet must be tracked, but there's really no need to enter redundant info on the forms. I find returns much simpler to complete and cross-check if I don't enter the info on the form when it isn't required. I generally follow the principle that it's best to only furnish IRS what's required. If they need more info, they can always ask.