What Tax Preparation Fees Will You Charge?

The days of manually preparing tax returns are over, unless you limit your tax practice to clients with only W-2 wages, some interest income and no itemized deductions. With Alternative Minimum Tax, Passive Loss Rules, Limitations on Personal Exemptions and Itemized Deductions, Depreciation for rental and business property, tax preparation software program is a necessity.

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Accounting Payroll QuickBooks Income Tax Investing Starting a Business Tax Preparation

New clients like to say they have a simple tax return as if to suggest their fee should be at the low end. I quote minimum fees in three categories, short form, long form (itemized deductions) and business (Schedule E or Rental) returns. The best new clients are those who call to make an appointment without asking about your prices. Charging competitive fees means you have to have a comparative benchmark. Should you compete with H & R Block or CPA's? I think this is a decision every new tax preparer has to ask.

Keep this in mind; all clients expect the same level of service. Also, keep in mind that your clients will generate notices from the Internal Revenue Service that they will bring to your office. Reviewing these notices and responding to them could take some time and should be billed as an extra service.

You will have to decide if you want to base your fees on a per hour basis, flat fee basis or a charge based on the number and type of forms included in the return. Whichever of these methods you choose, you still have to be competitive with surrounding tax preparers. I use three "minimum" fee quotes and explain that the total bill is based on the complexity of the tax return.

Let's do a little business plan:

Income:
300 individual tax returns @ $200 ea.	$60,000
Secretary/Administrative Assnt	$15,000
Computer software	$2,000
Utilities	$4,000
Rent	$9,000
Office Supplies	$2,000
Tax Library	$600

Profit	$27,400

When starting a tax preparation business you desperately want and need new clients. There is a tendency to initially under price your fees to attract clients. You might regret doing this in the long run.

Accounting Accounting Services Payroll QuickBooks Starting a Business Income Tax Investing

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