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If every tax return was exactly the same, your question could have a valid answer. Given the reality of our world, an accurate answer to your question is not possible. I prefer a knowledgeable, precise and ethical person to a fast person.

This discussion has turned more than a little wacky. The structure that Phillip is trying to follow is a legitimate way of doing business, one that I have encountered before, which actually does work. Whether I or you would use this structure is not the point. Phillip is just trying to get some feedback. I'm fine with posting that its not something you would do. But when posts go into "attack mode", it's doesn't contribute anything to the discussion. Unless you are' trying to discourage people that don't think the way you do from posting here ???

Yes. And, it was no longer a personal residence at DOD. The estate doesn't have a residence.

Too much to read. I worked 12 hours yesterday. Would have been 10, but I was listening to clients talk--about his new beard, her mother's recent illness, his wife's hospital stay and now his hip replacement; his car insurance; her employees disability troubles; answering if we like our new office, on and on. It was steady traffic and telephone calls all day. One client even brought us a bag of goodies from their deli and a new employee brought in the most beautiful rose from his garden for us to enjoy. Yes, working long and sometimes hard hours. Could be making more money, but hey, I had a great day!

I guess in an effort to have happy customers we forget that we are running a business. Businesses make money, otherwise you could run VITA, non-profit site and get some money from the IRS because you are running a non-profit tax preparation business. Does any one of us make as close as the president of HRB who doesn't even deal with PITA clients? Why is that? Because they admit they are in business and have marketing strategies. They have ratios, strategies how to get clients to the door, they have strategies on how to pay rent from 3 months of income. Some of us have difficulties paying our rent and we work like dogs most of the year. When I was taking math in college, I had some formulas that apply to a lot of business, but with time I have forgotten them. Now I run my business with the only direction to get 40 more clients each year by being a good counselor and by ignoring that I am in business and that I should not be wasting my time listening to my client's stories while I have other clients whose paper work is on hold because I am a good listener. My production ratio becomes very low, but hey, I don't have a ratio.

I/we have never computed such a number. More items are far more important. The last 10 years, at the firm, 30,000+ returns, 5 total audits for returns that we prepared. Preparing returns is different than a factory production line. I have a higher regard for our business than that. Therefore, ratio, and all the other indicators I see used in this kind of discussion seem to trivialize my profession. These discussions feel like the method the big box stores use with their "customers." I have clients, not customers. There is a difference, and I will ALWAYS have clients instead of customers.

I agree, no one should be attacked or belittled for asking a reasonable question. Just because someone chooses a different track does not make their choice either better or worse than someone else's track. Just as some of us decide to specialize in one or just a few types of clients, be that green card clients, ministry, OTR truckers, etc. While many take a broad range. NEITHER choice is wrong.

Can't answer that one. Client of mine who asked the questions regarding the tax consequences of this sale is not the executor. I asked enough detail to determine the tax consequences. As to the final bottom line, that is yet to be determined. I have not been officialy retained to file this return. If and when I am retrained, then I'll get all of the details surrounding the sale and what has taken place since the time of death. However, thanks for the advice.

Phil: I will go back to your earlier question, as its really a better place to be. I think you need to be more specific about the type of practice that you are in. Item #1, is a model for creating a bunch of returns that are the preparer's clients and they have no relationship with you, the owner of the practice. Item #2 is the model I use. This is the specialization model. Each person has a role to play, and does that specialized job to the best of their ability and gets paid the appropriate amount for that skill level. Whether or not you are getting 400 returns done with 1 person or 1,600 with 4. I had about 2.5 FTE during tax season here to get a little over 300 returns done. But they were not simple 1040's. And many corporate returns. There was me, my full-time staffer as inputter and bookkeeping, my wife PT as an 1040 sorter and inputter and my son as the copy and assemble guy. Each brought different skills to the table. I would love to hire someone and suddenly have 400 returns show up... Is your business model set up to attract a whole bunch of new clients? And what would be the type of return being prepared? And then I see why you asked about item #1. But that requires a much more skilled person and therefore more dollars for that person. Item number #2 sort of allows you to grow the practice and the hours used by the employee's as the practice grows. Rich

Ok, I agree with you Pacun to a degree. We all take our breaks differently. Some check out their favorite sites on the internet throughout the day, others make personal phone calls, some cultivate relationships with the clients, and some do all of the above. (That would be me). At my age, I have built a practice around my lifestyle, and have attracted clients and employees who fit my business model with all of it's imperfections. I'm ok with that. That's the beauty of self-employment. Those who don't fit my style, move on. My bills are paid. There's plenty of fish in the sea, there's plenty of fish for me!

Since her income has been entered into the court records and there is a record of the income claimed on the return, his attorney might be able to go back to court and have the judge compel her to sign an amended return. Otherwise, let sleeping dogs lie. Neither innocent spouse nor whistle-blower are a slam dunk. Your client may not be telling you everything, all the facts and circumstances. He happily signed the joint return, so no innocent spouse there. If the return gets audited and additional tax is assessed, then that would be the time to file innocent spouse. With whistle-blower it usually has to be a fairly substantial amount before they will even look at it. Essentially what he would be doing is reporting on his own tax return. That could take unforeseen turns. The IRS does lengthy investigations, and you never know, they may turn up something on your client. What he might try is to file the amended MFJ return, but only sign his name. The IRS will send back a letter requesting her signature. An official letter might put enough pressure on her to sign. He can also amend to MFS- IF he can get the marriage annulled. Then all the returns filed jointly would have to amended.

I have just come up with a thought on this matter. if it is an absolute requirement that you make 3X what your top preparer is making, lower his/her pay to 1/3 your salary. This will accomplish the requirement you have established as necessary, and will find out if your top preparer was paid too much or not. Chances are you will have to replace them. I do not understand your need to have your pay based on what one or any of your employees make. Seems a bit obsessive to me. Additionally, unless you can be three times as productive as your top employee, your requirement would seem a little misguided. Why not just decide on a salary that you will be happy with, and go on with business. I really am not grasping the need for such a requirement based on an employee's pay vs yours. Just my opinions, and my rant about this.

This pair is so happy together you just know they are going to be best buddies http://www.youtube.com/watch?v=XD-C0HPD0Vc

He can obviate the estimated tax problem by taking a salary/bonus check in December and allocating most of it to withholding taxes. (for example, $10K salary, less $765 SocSec/Med, less $8K Federal Withholding for a net check of $1,235. Adjust as necessary for state tax, etc.) The withholding paid via W-2 is considered as being paid in equal amounts throughout the year.

The salary vs distribution does not look "reasonable" by my way of thinking. The IRS is really tracking this situation lately. John H is correct.

I see this is your first post. Are you familiar with the issues surrounding "Reasonable Compensation" and S-corp owners? Did you explain this to the prospective client? This is the first conversation I always undertake, because if they won't deal with that, then we really don't have anything else to discuss.

OP Sounds like you run an H&R....or JH.....where the customers come in for simple returns and big refunds. You don't build relationships...you focus on turnover. This isn't what most of us are about. I do everything myself. Some of my more complex returns are quicker than some of the simple ones, where I have to do explaining and/or hand holding. That's because I focus on the person and what that person needs. I don't want the "one shot" deals.

I agree with Jack and KC. Tax returns and taxpayers are too varied to come up with an average time or cost. You can have two clients with Sch Cs, one with all receipts neatly summarized, another with a shopping bag full of every piece of mail that looks financial he got all year, including birthday cards and the life insurance bill he threw in the bag instead of paid. Of course you charge the shopping bag guy a lot more because it takes so long to organize his mess. You still end up with two Sch Cs, so an average makes no sense. Then there are the clients you have to chase for missing info. Some of these people are missing half their tax data, and they piecemeal it to you so you never know where you are in the return. Others are missing something simple like their car taxes and get the number to you the next day (or two months later). The preparer not only has to input the data but be thorough enough to know what's not there and communicate with the client. Takes time, but again the fees will reflect that. At the chains the model is pretty much to get every client in and out in an hour or less. I wonder how often things like car taxes are ignored because the client doesn't have them with him or her and no one wants to put a return on hold. In a professional practice, it can take a whole season to determine how much an employee brings in per hour. Some days I put more returns on hold than I complete--looks like I didn't cover my pay. Then one day a dozen clients provide that last bit of info and I collect thousands. Again, averages don't work. Perhaps instead of calculating ratios and averages, you should offer a reasonable hourly rate. If you only have a only few employees it won't take long to see who is earning their keep and who is texting all day. Remember too that experience with each client's quirks will help to speed things up in the future. I have a couple of shopping bag clients who used to take me hours to sort and categorize. Now that I know them and what to expect in those bags, I can separate the wheat from the chaff in no time.

I agree with Jack on this part. No two Sch C's are the same, ditto Corps and Partnerships and LLC's. The time is going to depend mostly on how complete and how well organized the records the client provides are, plus # of partners/members, etc. Even 1040's can vary widely. Say four returns, all 1040's, and say 3 W-2s each. But Taxpayer A has education credits, interest income, and a 2106. Taxpayer B has a Sch B, a Sch D and a retirement plan rollover and RMD calculation. Taxpayer C has Sch A, with 6 non-cash contributions, significant medical expenses, and they refi-ed their home mortgage. Taxpayer D has nothing but those W-2s and a little UI. Are you going to pay the preparers the same for each of those? Or expect each to take about the same time?

I was at my young nephew's house. I said: "Give me a newspaper." He said newspapers are obsolete and handed me his I-Pad. The fly never knew what hit him!