Retainers/Upfront Payments

[geekgirldany]

Just wondering how many of you get your payment for services upfront. Current year tax returns, quickbooks services, bookkeeping, etc.

What I usually do is for the current tax returns like 2009 tax returns, I will work on them and then get payment when they come to pick up. Well this year I had several that never did come by. Some very complicated. I have seen prior year returns where an accountant said there was an upfront charge based on the previous years return.

I have also had some new QBs clients this year that would not pay. I sat with them for over an hour to review QBs and answer questions only for them to say at the end that I did not tell them there was a two hour minimum charge. Which I did tell them. So I only got paid for one hour or not paid at all. I did not get them to sign an engagement letter because I thought it was only for a couple of hours.

Bookkeeping and payroll I get paid at the first of the month. Multiple year returns I get half down on estimated charge.

Would appreciate feedback.

Thank you
D

[erchess]

I vary way too much

I never collect in advance on local tax returns because I do them in the homes and offices of the client and would only go away and come back if I needed some time for research or just reflection. Naturally I don't give them their returns or efile their returns until I have their check or cash.

When I do returns for people from outside my area who send me their stuff I do ask for the fee before I efile the return or send them copies.

When I do representation for in area or out of area people I should I guess be firmer about my policy which is to collect my minimum fee up front and the rest when the matter is resolved. Heck, maybe I should even invoice monthly. What I actually do is NOT state that policy to people who tell me that they have lost money to the big firms and who clearly do not qualify for an OIC.

I do consider OIC business separately. I charge for that up front because the people are honestly either very poor at handling money or very reluctant to make payments or both. Also let's face it, unless the OIC was done due to doubt as to whether they really owe that much, they are going to be awfully strapped financially after they pay the taxing agency.

[geekgirldany]

Thanks so much for posting.

This is off topic of what I asked... but that is really interesting that you do the returns at the client's home or office. I believe I remember you saying something about this on another post.

Do you take a portable printer with you? Do the efile right then or when you get back to your office? I have a client that's old accountant would come to his home. That is really a value added service you have.

[AZ-Tax]

I am moving more and more to a downpayment

I am moving more and more to a partial payment upfront. In 2009 it was just S-Corps and personal tax returns (1040) for which the fee would exceed a certain dollar amt but now I am strongly considering a minimum $100 downpayment for all personal returns with the exception of 1040EZ (I prepare very few and those I prepare are usually kids of a TP with a 1040). I discusssed this downpayment with my clients over the last 2 yrs and no one had a problem with it.

So I am once again considering accepting credit cards and debit cards.

[geekgirldany]

I was looking at a new client's prior year return. He included a letter he had just received from his prior accountant.

It said "your estimated charge is $350 based on your previous year return. When you drop off your tax documents be prepared to make a prepayment based on this estimate. Not paying will only delay the preparation of your tax return and no guarantees will be made that the return will be completed by April 15th."

That was the first time I had ever seen that before. Client said he never saw the accountant until he picked up the return. Then it was only for a few minutes. If there was any questions an assistant would call.

Makes me think I should be doing things differently. Still have that meeting to go to with the SBA so I guess I will find out.

[erchess]

Off Topic

The printer I use is an HP Laserjet P1006. It is not advertised as portable but it made it through two tax seasons bouncing around on my hand cart up and down stairs and across rough terrain. I think you can actually buy portable printers but I think they might be inkjets and I will not give a return that will smear if it gets damp to my clients. However this printer has begun to smoke when it prints and if changing the toner cartridge and print head do not change this, I'm going to get a new printer, I hope of the same model, before the end of December.

If I lived close to a small area from which I drew most clients I could do the returns in my home office with the interview and the delivery taking place at the client's home or office. I instead draw clients from a large area that starts twenty miles from my home office and gets as far away as 50 miles away.

Where I efile varies. I sometimes ask to use their internet connection particularly if they are getting a refund and we are close to a cycle cut off. I have been known to use a WIFI hotspot in conjunction with a VPN when I was in a bind for time. But most of my efiling I do from my home office.

As far as changing the way you do business, your first decision is how you want to posture yourself before the public. If you are selling generic tax returns to people who believe that any professional out there can do their return so they would be foolish to buy from any but the lowest bidder, then you can set up an assembly line system. A subordinate can do the interview and you can do the returns and when you get enough returns you can have more subordinates. Each subordinate can work on certain whole returns or each subordinate can work on just one or two parts of many returns. You can review and sign all returns and don't forget to include the form letter thanking them for their business and hoping that they enjoyed your personal service. I call that the "McDonalds" plan and there is no question in my mind people who do this can make good money and do competent work. However there will always be high turnover in your client base because people are always looking for a better deal.

If on the other hand you are selling personal and professional service to clients who know that the cheapest option is often not the best buy then whether or not you have associates, people need to be initially interviewed by, get any followup contacts from, and receive the return from "their tax professsional". I call this the "Grove Park Inn" plan after an Asheville NC restaurant and hotel that makes say an Adam's Mark look like a Motel Six and charges accordingly. People who will accept being put on an assembly line won't see your service as anything but a commodity and people who see your service as something worth paying a premium for won't put up with anything less than truly personal service. You can make money operating a "McDonalds" or a "Grove Park Inn" and indeed at any number of price and service points in between. But your first decision should be to pick a point on that continuum and then make sure your plans fit the clients you are looking for.

[taxxcpa]

How much do you charge?

When I had a yellow page listing, I often got calls asking, "How much do you charge to do a tax return?" Apparently they assumed it was a one-size-fits-all kind of thing. I would tell them that most returns were between $ 100 and $ 500.

The idea of a $ 500 return flabbergasted them. They probably just had a W-2 and maybe some mortgage interest and real estate tax and expected to pay $5.00 or $ 10.00.

After that they probably went to the next name in the yellow pages trying to find someone who charged $ 10 per return regardless of its complexity.

[JG EA]

I was looking at a new client's prior year return. He included a letter he had just received from his prior accountant.

It said "your estimated charge is $350 based on your previous year return. When you drop off your tax documents be prepared to make a prepayment based on this estimate. Not paying will only delay the preparation of your tax return and no guarantees will be made that the return will be completed by April 15th."

That was the first time I had ever seen that before. Client said he never saw the accountant until he picked up the return. Then it was only for a few minutes. If there was any questions an assistant would call.

Makes me think I should be doing things differently. Still have that meeting to go to with the SBA so I guess I will find out.

Do something differently? Your new client didn't think much of this method as evidenced by coming to you.

[erchess]

Taxcpa

I know what you mean. The majority of people who call around checking price seem to assume that they are on the low end of the price scale so their fee shouldn't be much more than your minimum charge and probably a good bit less than your average charge. When I worked for another firm a guy told me on the phone he just had a simple return so what was our minimum fee. I started talking to him about his financial life and he had if memory serves W2, Self Employment with a net profit, interest and dividends sufficient that either one would have required Sch B, and I think about a hundred stock and bond trades including options, straddles, wash sales and short sales and he had Sch A with entries in every section including mortgage interest on too high a principal amount and total income that limited his A and his Personal Exemptions. And get this, we lost him because we wouldn't do his return for our minimum fee.

Some people see their tax service as a commodity and if items in the marketplace all have the same value why would anyone pay more than the lowest possible price?

[DaveO]

I tell the shoppers that our minimum fee is $100 and it goes up by at least $25 per form or schedule added. I also tell them complex issues requiring research or a large number of "D" entries will add to that.

[erchess]

Question I ask

I often tell callers that in order to properly answer their questions about me I need to know about them and their situation and in particular whether they believe Statement A or Statement B.

Statement A - Any tax professional will do a good job for me so the main thing I look for is the lowest price.

Statement B - Tax professionals offer different levels of training, experience, and personal service so that some are worth much more than others.

If they believe statement A I say that I am definitely not the cheapest out there so unless they have more questions I need to say goodbye. They usually end the call but sometimes they ask about ME and I answer their question. If they say B I discuss in detail anything that may be on their minds including my training and experience, my level of personal service, and my fees.

I find that I get appointments out of roughly 2/3 of calls and most of the calls that do not result in appointments are quite short. I sometimes get after statement A either a "That's me click" or just "click". Where I am having a problem is that the phone does not ring as much as I would like.

[geekgirldany]

Phone Calls

JG you are right. He did come to me for a reason.... but he hasn't been back. Never picked up his NOL tax returns

I get alot of those calls also. I have been saying from $100 to $200 depends on your situation. Erch you have a good response there. I really like that. I think if the first thing out of their mouth is "what is your price?" then this person possibly will not be a long term client. I had a few left because I went up $10 this past year.

I might have mentioned this before but I got a call probably about a month ago asking for price tax preparation. I asked them their forms. They forgot to mention about the rental house and business. So I got that out of them. Told them my estimated price. They then asked for a discount because their prior accountant would give them one if they did an extension on April 15 and waited until later. I told them I have never done discounts like that and I have charge the same no matter when the return is brought to me to prepare. They asked for directions but never came... I guess they went to get their discount.

Erch, talking about the phone not ringing as much as you would like, I know what you mean. As I said before I am going to meet with the SBA advisor after I get all these doctor visits and other personal things finished up. He said he would tell me different ways to advertise. I am probably going to have to do a new business plan also. I hope to share what I learn with everyone here.

[Lion]

Referrals

Ask your current clients for referrals. Ask your broker and your lawyer and your insurance agent and your mortgage broker for referrals. Make sure you tell everyone at church and your leisure activities what you do for a living. Have your one-minute elevator speech polished. Hand out multiple business cards to everyone who asks (one for them to keep themselves and more for them to pass around).

Don't forget to return the favors by referring people to your broker, lawyer, etc.

[DaveO]

I lost a client over a $10 increase too last year, geekgirldany. I was so happy to hand her back her W-2 and watch her leave. After 45 minutes of hearing her whine over "what else can I get?" and "arent there more tax breaks for someone like me?" and "are you sure that's all I can get back?" I was starting to get testy over the questions as if I didn't know how to load on the EITC and other refundable tax credits.

[joanmcq]

When asked what I charge, I always say it depends on the complexity of your return. And if they say a Sch C or E, I will give a minimum charge of $50 for each rental or business, plus depreciation, but it depends on if you are well organized or give me a shoe box of receipts. For shoe boxes, I charge an additional $125/hour. Some people want to pay that. Most don't and organize accordingly.

Most people pay when they pick up the return, or after I mail it. Multiple years or audit representation require a deposit.