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Christian

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IMHO, you under charged your client.  My very minimum charge would have been $475.  Depending on how many other factors were involved in the actual preparation of the returns is the only way I would feel comfortable in telling you if my fee would exceed $475 or not.  It's amazing how some people can split hairs in regard to your fees in preparing something as important as their income tax return.  

And don't let the fact that you are not a CPA discourage you from charging how much your fees should be.  I have seen errors on returns prepared by CPA's, their receptionists, and others regardless of what initials they use on their signature line.  

If said client doesn't return, consider yourself fortunate as he/she is likely to be a thorn in your side every year.  Let them go play "winning through intimidation" somewhere other than your office!

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On ‎5‎/‎24‎/‎2017 at 10:33 AM, RitaB said:

...the perception he has is that this price is too high for him...he will go elsewhere if there is a less expensive alternative...It's one thing to know your worth, but it's quite another thing to watch business go down the street.  I personally would rather charge $275 and HAVE a client than know I'm worth $325 but be sitting here watching the client parked over at Tammy's X-Treme Tax Returns...

That's my philosophy too -- even if it did take four or five hours.  $275 dollars is $275.  After all, what am I doing after tax season that's so pressing I can't make up the lost time (playing Sol for a couple of hours doesn't pay nearly as well).  Only thing that might make me not do it is the "minister" portion (those "C" guys are supposed to be traveling evangelists and most aren't).  IRS likes to force 'em to switch to W-2 status and kill off their (big) mileage expense.

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22 hours ago, BLACK BART said:

That's my philosophy too -- even if it did take four or five hours.  $275 dollars is $275.  After all, what am I doing after tax season that's so pressing I can't make up the lost time (playing Sol for a couple of hours doesn't pay nearly as well).  Only thing that might make me not do it is the "minister" portion (those "C" guys are supposed to be traveling evangelists and most aren't).  IRS likes to force 'em to switch to W-2 status and kill off their (big) mileage expense.

I am still kicking myself over bidding too high on a guy that came in February, BB.  He was very disorganized, had several mutual fund sales, retirement, W-2, wife had SS benefits and retirement, eight or so entries on Sch B.   Not a difficult return for a tax person, impossible for a DIYer.  I padded it a little (for me, I know, not for most of you) and told him $225 and didn't see him again.  He was well dressed and had a good job.   It would have taken a little time getting him set up, but the returns would have been much faster in future years.  A good client.  No begging for accurate expenses and all the income, no proving these are your kids, etc.

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36 minutes ago, RitaB said:

I am still kicking myself over bidding too high

Stop it.  Just spending an hour with you would be worth $225.  If he is too cheap to pay what you are worth, let him go.  You offer more than just filling in the amounts, you offer your expertise, your time in the off season, a reliable professional to give good advice all year and planning for future years.  If this guy can't see that, it is his loss.

Tom
Newark, CA

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7 minutes ago, BulldogTom said:

Stop it.  Just spending an hour with you would be worth $225.  If he is too cheap to pay what you are worth, let him go.  You offer more than just filling in the amounts, you offer your expertise, your time in the off season, a reliable professional to give good advice all year and planning for future years.  If this guy can't see that, it is his loss.

Tom
Newark, CA

This is why I love you, Tom.  Yes, I'm as good or better than whomever told him $185.  But he couldn't tell that from a ten-minute conversation.  None of them can.  I didn't even get a chance to hug him.  They don't know what they don't know.  Maybe he went to Tammy's X-Treme Tax Returns and she put 60,000 miles on Form 2106 or totally missed a mutual fund sale, and he'll get audited, and I'll see him again...  Thanks, I'm talking myself into not kicking myself, Tom.  :wub:

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Just some food for thought.  Maybe we are bidding some of these prospects too low.  I like to set my prices high enough that the prospects have an inkling that I value my services.  If it is too high for that prospect, so be it.  I can tell you that I have heard a word on the street that my fees are high.  OK - but I can tell you straight up - and I have a boat load of clients to confirm it -  that there must be value in what I provide at those "high" fees.  I use to strive to not be the lowest price in town.  Now I strive to be one of the most respectable and respected firms in town.

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If no one complains that your prices are too high, then your prices are too low!

I have only so many hours in the year.  I can fill them with $500 returns or with $225 returns.  I choose to NOT be the cheapest.  I choose the higher priced returns.  Then I can spend an hour with my husband or granddaughter.  I think it was someone on this board who said:  If he was going to work for free, he'd take time off instead.

(I have plenty of clients at a LOT less than $500.  Not that they should be less, but we all know how hard it is to increase prices enough to keep pace with their more complex financial lives as well as inflation and even my increasing worth.  But, I try not to take on a NEW client under $500.  Remember I'm in pricey Fairfield County, CT.)

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47 minutes ago, Lion EA said:

 Remember I'm in pricey Fairfield County, CT

That is absolutely something to consider.  It's definitely all relative.   I did Google searches for median home values in Fairfield County, CT and Crossville, TN.  The top hits show that the numbers are $535,600 there compared to $90,800 here.  

It's different here - I love my low cost of living town, and I don't struggle.  I do love to work, and I do like to get the business I want. 

My house cost $342,000 and it's paid for.  I'm doing ok.  :)

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9 minutes ago, RitaB said:

  I'm doing ok.  :)

As long as YOU are happy with what you are making - and you can pay your bills - it kinds doesn't matter what you make.  However, do NOT sell yourself short and undervalue your services just because you are "doing OK."  

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2 hours ago, RitaB said:

 1.  I do love to work, and I do like to get the business I want. 

2.  My house cost $342,000 and it's paid for.  I'm doing ok.  :)

1.  Good For You

2.  Great for you

I paid 525K for a 1230 square foot fixer in the bay area and got a steal, but that is not paid for yet.  I wish I was Rita.

Tom
Newark, CA

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15 minutes ago, BulldogTom said:

I paid 525K for a 1230 square foot fixer in the bay area and got a steal

One of my husband's cronies, back when he lived in the San Jose area in the early 80's, paid close to $1M for a house that had originally been a chicken coop....  I kid you not.

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3 hours ago, Catherine said:

As long as YOU are happy with what you are making - and you can pay your bills - it kinds doesn't matter what you make.  However, do NOT sell yourself short and undervalue your services just because you are "doing OK."  

Oh, I never said I was satisfied with what I make.  I know I'm worth more.  But you can only make what people will pay.   If you can't get the client, you don't get any money.  I'll take decent money over no money.   And I make very decent money.   No, I don't take every job.  I turned away a bookkeeping client last week because I figured it would be a hassle every time I turned around and they would be in business about twelve long, miserable months.  Six if I was lucky.

There are too many preparers (here anyway), and the risk of getting caught preparing crappy returns is, well, about zero.  You can charge what people will pay you to solve a problem.  If crappy returns are not a problem, and If a great number of people actually prefer a crappy return, well, it's crappy for your bottom line.  Plus, it doesn't take a genius to do taxes anymore, they say, so there's that.

You know what would happen if there were twice as many doctors, and twice as many lawyers?  Yep.  Medical care and legal work would cost less.  It's just what happens with competition.  

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Yesterday I emailed an attorney with my fees for a trust 1041, since he is doing the estate return and can deduct them.  The trust was a grantor trust in 2015 with not much on it that all went over to the individual return, which I was doing anyway so I charged $250.  This year it was a complex trust, final return, with four K-1s.  There were literally three stock dividends to put on it, nothing to weed out that belonged to the deceased.  It took a little over an hour, most of that time spent assembling, and I charged $500.  Attorney got back to me that my fees are low!  Maybe he's used to making $500 an hour, but that's glorious to me.

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12 hours ago, Catherine said:

Even more so when it's competition with ZERO repercussions for the bad/unfair competitors.

Yes, I see this as the biggest problem I have in business.  It's frustrating.  I got 15 new clients this year, newcomers to the area, all with errors on their 2015 returns.  Yes, all.  Only one has received a letter, and her problem was a 1099-R that was left off the return.  The 1099-R was missing from her paperwork, however, she did include a brokerage statement that showed it.  I might have missed that one, too.  The other errors were from carelessness or intentional fudging or lack of expertise.  And you know what?  They will never get a letter.  It's easier to be careless, or fudge, or be inept.  They can charge less because they "work" faster.  And if they're REALLY into fudging, they can charge more.  The honor system is tough on honorable people sometimes.

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I cannot give out information about the client's return without signed permission from the client.  And if they are going to get the client to give me permission, why not just ask the client what he paid me last year?  There are legitimate reasons to ask - as Rich said, they might be deducting it on schedule A.  Or maybe applying a portion of the fee to a schedule C, E or F as a deduction.  But why don't they just ask the client if they need to know?

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^^^ Good points from all, FYI I am on good terms with the ex-client, have their permission to answer any questions and provide any information necessarily for a smooth transition and I have been cooperating.  I didn't give them a direct answer, I said it's hard to give an exact amount because it's been a while I haven't done work for them, and I also provided other services besides the preparation of the business tax return, but yes if they look at the accounting fees they can get an exact idea of what I billed that client for the year.

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