Charge per return?

[Skate1968]

Hello all,

I've done a little searching for information regarding what to charge for tax returns. I've found posts here about hourly rates but NOT about 'per return' rates.

I'd like to have a better idea about what H&R charges. But i do know that thier pricing scheme is based on both complexity of return and location. I'm looking to use it as a reference.

If anyone could give me more information about this subject I'd greatly appreciate it.

Thanks

[Eli]

You might....

have to walk in or call your local H&R Block to see if you can get prices. I'm not sure where you're located. I'm in South Texas. I'm sure my pricing would be way different from yours.

Eli

[Skate1968]

Thanks Eli,
I have visited H&R & Jackson Hewit. They generally give out a little info but never thier complete pricing structure. Maybe i'll just make multiple phone calls.

I'll call some local pratitioners as well.

[fliszt]

That is a

tough question because partly of location. If a "return" in NYC cost $x then in Georgia it may cost $x-1. I can tell you what I charge here in MN but perhaps it wouldn't do you any good in your location. There's a CPA down the street from me that starts charges at $300 per return. Some of my clients are from HRB. And they charged a single mother close to $200 for the return for a simple sched A. I don't charge some low income people, students, single parent and very elderly persons. I know some other EAs in my area that start charges at $150, but again, that's "this area". Sorry I am not more help that this.
Larry

[Skate1968]

Larry,
You are a help. Thank you

[KBTS]

Pricing

As others have mentioned, pricing will vary a great deal depending on your location. I am located in a rural area and prices here are very low compared to what is charged in the nearest small city. Our local HRB has a price schedule that is strictly determined by the forms used and the number of entries on certain ones (interest, dividends, stock sales, etc). Generally, their pricing is high compared to most other locally owned tax businesses.

The best way I have found to get an idea of local pricing is to either call yourself or have someone call for you with a "standard" return and ask for pricing. For example, ask the price for a 1040 with Sch A and Sch B. This will give you a general feel for how much they charge and then you can compare the prices you get from the different companies to see who charges the highest down to the lowest.

One word of advice, don't try to be the lowest in your area. There is always going to be someone working out of the back of their garage that will charge $25 for any return and you most always get what you pay for in that case. Try to be in the middle of the price range, but provide the best service. That is what brings customers back and gets referrals from them.

[jainen]

a feel for the market

>>I'm looking to use it as a reference<<

Although H&R Block pricing is often used as a standard, it really is a poor guide to pricing in an independent firm. Think about how different your practice is. Block must support a huge corporate structure including a massive advertising budget and year-round leases in high-traffic locations. They also sell other financial products such as loans, but have little income from taxpayer representation services. They pay their workers on commission. It should be easy to beat their prices unless you have unusual expenses like major research subscriptions, remote travel, or lots of pro bono work.

Anywhere in the country you will find tax preparers charging a very wide range--Schedule A returns from $75 to $250, depending on related services. For example, an accountant might charge more for a personal return in connection with a low-cost Corporate return--or might do the personal free! Everyone on this board will probably discount a dependent's return, and will occasionally charge more or less simply on the client's ability to pay.

Rather than phoning, I recommend you visit two offices with a return from last year (reprinted with fake name and SSN). One is a 1040 with Sch A, the other a typical businesss return, probably Sch C with a little depreciation. All you care about is pricing so don't go into tax knowledge or speed of processing or anything else. Please do NOT misrepresent your purpose by pretending you are looking for a new tax preparer! Just ask them to price it, period. That's all you need to get a feel for the market.

[Black Bart]

My experience is the same as KBTS'.

And I agree with his conclusions about how to operate.

HRB here charges $85 for a 1040, schedule A, and two W-2s; or so a couple of their ex-customers told me. But, as you know, customer impressions are notoriously unreliable because there's simply no way to tell if they know what they're talking about or not unless they give you a copy of the return with a receipt enclosed. To some people, everything is a "short" form and they may have have one W-2 or ten W-2s. When Block first arrived here they tried for several years to underprice us, but couldn't do it and eventually gave up and disregarded the competition altogether.

Years ago I tried to find out what they charged from a guy that worked for them. He said that franchisees can set their own prices. He gave me a few, but said that they did not actually write down the prices -- just kept them in their heads.

But anyhow, KB's right -- they're generally higher than the independents (except OldJack the Pirate and his $500 returns) and the indies are higher than the card-table crew.

[sea-tax]

I can tell you that the local H&R office nearest me last year charged $165.00 for a 1040 with sch A that was efiled. Greater seattle area.

I know this because the client came to me with the 2005 return because they felt something with there refund smelled "fishy" as they put it. The Bill was attached to the return.

After I reviewed the return the client was right to be worried. The preparer had given them the property tax deduction then used the same number as the cash charitable contribution figure. TO say the least the client was a little taken aback.

[Skate1968]

>>I'm looking to use it as a reference<<

Although H&R Block pricing is often used as a standard, it really is a poor guide to pricing in an independent firm. Think about how different your practice is.

I see what your saying. Being a CPA, it's certainly not my career goal to imitate HRB. But at the same time I really want to know which clients would truly be better off with me as opposed to HRB, JacksonH, local guy, etc.

Everyone on this board will probably discount a dependent's return, and will occasionally charge more or less simply on the client's ability to pay.

I have one client who was really getting the stick from Fidelity Investments. Fidelity Bank kept insisting that his 1099 was for $27,000. I did a little research, made phone calls and wrote a few letters. Fidelity Bank called him apologized for the error and gave him an amended 1099 for $3,800.

Anyway, I never made a ton of money from this client. But i gladly do his return to keep him as 'customer referrence.'

Rather than phoning, I recommend you visit two offices with a return from last year (reprinted with fake name and SSN). One is a 1040 with Sch A, the other a typical businesss return, probably Sch C with a little depreciation.

Thanks, that's a real good idea.

[Skate1968]

One word of advice, don't try to be the lowest in your area. There is always going to be someone working out of the back of their garage that will charge $25 for any return and you most always get what you pay for in that case. Try to be in the middle of the price range, but provide the best service. That is what brings customers back and gets referrals from them.

Thanks for responding, and yes i do agree with that. I know at least two of those 'discount preparers.' If if someone just wants a very simple return I'd gladly refer those clients to the 'discount' people.

[taxmandan]

Your situation is different

You need to internalize your pricing decisions and not be concerned about what HRB or any other tax office is charging. Determine what income you need to cover your business expenses and how much more you need to live in the manner to which you aspire. Your overhead is different than HRBs so comparing prices doesn't do much for you.

Figure out how many tax returns your office can reasonably complete in the tax season and during the off year (at full capacity, not during the start up years). The usual figure for a proficient tax preparer is 300-350 returns in the tax season.

Now, do the math and determine how much your average return fee has to be to make the income you need to stay in business. You can break out that number to fit the forms on the "typical" return your clients will have, 1040, Sch A, B and state. This will give you a starting point for setting the form prices.

I agree with the others, don't try to be the low price leader. SBA stats show that more businesses fail from charging too little than from charging too much. My ideal client, and I have many, understands that value is worth something and a cheap service or product likely means poor quality/value. Now if you want the EITC/RAL cleint and want to compete head to head with HRB/JH, then forget all this and just keep lowering your fees until you drive them out of business and have the market to yourself. ;^ p

[HBurkholder]

Hopefully each year you will have some new clients. You will NEED their prior year return for certain information. You will also ask what their bill was for preparing last years return as that IS deductible on sch. A. This will give you a feel as to where you are in relation to your local competition.

[Skate1968]

Thank you!

...Please do NOT misrepresent your purpose by pretending you are looking for a new tax preparer! Just ask them to price it, period.

This proved to be an excellent approach! I called a practitioner's office and introduced myself as a tax preparer.

Not only did he give me his pricing structure but he was downright chatty with me-- excellent! He was an older fellow who volunteered a ton of information about his own practice, the competition and the industry in general!

(and to be honest i'll throw some business his way)

[Cindy]

NSA Average Cost of Tax Return

I have a copy of an article that lists the NSA average cost for a return. I would be glad to email it to you. The rates are much higher than I charge, but as stated before, each area and tax preparer is different.