I finally rolled my independent practice into a larger firm. My fees were still barely half of the rest of the office, but one client complained about the price increase. I replied:
That’s a real good question! ,One of the reasons I brought my clients into XX’s office is that my own low rates were no longer sustainable. Although my office overhead was minimal, the cost of software and continuing professional education can not support a small practice any more. The Enron scandal, mortgage collapse, and other accounting industry problems over the last decade led to new standards for handling financial records and other IRS compliance issues. These are much better managed with supervision and a clerical staff, but that has to be paid for.
Although your income numbers aren’t high, we must charge according to the complexity of the return. Your family has several tax matters that increase the cost of tax preparation. The most obvious is accounting for a small business. (About half your fee is deductible for that purpose.) You also have a partnership with a passive activity loss carryover. There was a technical sale of less than one share of XXX in a merger, but that generates a three-page form on your tax return. So that’s what’s going on.
XX has allowed me to raise rates slowly. Standard pricing in this office for work listed on your invoice would be $xxx, although I would expect the actual price to be $xx dollars lower because you provide complete records and some of your items are relatively simple. We haven’t done any systematic market research recently, so I can’t say if that is high or low. It’s just what it costs for this office. You should take your invoice or the return to a few other accountants for comparison.