Jump to content
ATX Community

Preparer Productivity for 1040 returns


Philip1117

Recommended Posts

 

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! :P

  • Like 3
Link to comment
Share on other sites

"Too much to read", that's correct. After listening stories about the fact that they about to loose their home and blablabla for 30 minutes for four clients, who will have the energy to read!!! My partner talks a lot more to my clients and there must be an equilibrium like in any other ratios. The talking ratio should be reduced because I loose clients because of my partner's listening and asking too much questions. I lost one client who came one day and started talking to my partner about  how happy she was with her house and how happy she was about the sale person and she wanted to refer more people to him. For a couple of years they talked a lot about that house. On the third year the client didn't come and later we found out that she lost her house and was pissed with the sales person.

 

Another lady came and I did her's and her daughter's taxes. Again my partner start talking about her country, her food, her tradition etc. The folloing year she came with an engagement ring and showed it to her and my partner show it to my and they started talking about the fact that she was going to be married to this young guy from South America and that he was a Student getting his doctorate. The following year she came and said that a month earlier, on Feb 14th to be exact, she got married. I explained to her that next year she needed to file jointly. I prepared his taxes and the guy said that he was returning to his country and that if I ever wanted to come and visit, I was welcomed. I said, I do want to take my friend their, she will like to visit, He replied in Spanish and said "Why do you want to bring sand to the beach?". We laugh softly because my partner and his wife was engage for a while on a conversation. The next year, the lady didn't show up for her taxes. Later we found out that they had split and she was depressed.

 

The talking ratio should be reduced to 5 minutes per hour of work. I forgot how to do ratios but that is 5/12 ratio.

Link to comment
Share on other sites

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!

  • Like 2
Link to comment
Share on other sites

For those of you who hire preparers during the tax season what standard do you use to determine how many returns that person should complete in a season?

 

For example if your business is mostly 1040 returns that are dropped off  what would your expectation be as to the number of returns a person can complete? 

 

Model 1: The person would input, print, assemble and deliver the return to the client with a personal review.  Same person all the way through.  Say 1 per hour so that's 400 in a season.

 

Model 2: Have different people for each step in the process.  Intake, Inputter, Print and Assembler, Deliverer.  Four people so this team would have to do 1600 returns.

 

Which model to do you use? 

 

How do you determine how many 1040 returns a person should complete? 

 

If its non 1040 work what is your time allowance for these returns?  How many hours for S crop,  C corp,  Partnership, Difficult schedule C,

 

 

Phil

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

  • Like 1
Link to comment
Share on other sites

I am not interested in building a business that is a personalty cult around me.  I want to sell my business someday and make the most money possible.  Most of our returns are moved to our lowest cost service option which is drop off.  Next level of service is staff appointments,  Next level is CPA appointments and then finally Appointments with me. 

 

The reason for the minimum of 3x revenue is to cover overhead not to determine my compensation.  The real multiplier needs to be closer to 7x.  I need the tax business to pay for all office overhead for entire year plus have a return on my investment.  Tax business fees are about half of the compensation the rest is from the Financial Planning Business.

 

We eliminated many steps in the tax business.  No copying, No paper files, no assembly of returns just print and stuff in envelope with slip sheet, no payment no Efile so we don't have AR.  Print minimal copy for client, Burn full copy on CD which clients return with each year.

Link to comment
Share on other sites

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 ???

  • Like 3
Link to comment
Share on other sites

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.

  • Like 1
Link to comment
Share on other sites

But, you did get info, and more importantly, you seem to have had the info you need all along.  We don't know anything about your overhead, etc.  You are the one who will have to do the math to get the ratio you want for your business.  If you want 1/3 to go out as compensation to your employees and the other 2/3 to stay with the company to cover your overhead and your own profit, you can make that happen.  Only you can decide how to divide that 1/3 based on your assessment (the only one that matters) of the value of each of your employees.

  • Like 3
Link to comment
Share on other sites

I realize that with regards to the money.  I wanted to know how many 1040 returns each preparer does in a season.  If enough people had responed then it might have provided useful information regardless of return dificulity.  For instance if we do 400 and you do 600 then that is a big enough of a difference to try to figure out what is going on.  If it turns out you do 375 or someone else does 425 then the numbers are so close as to not need further study.  Everyone knows thier average returns per preparer they just didn't want to share.  Why? Beats me I just have to accept it.

Link to comment
Share on other sites

Why didn't you ask it that way?  OK, I've retired now, but did, in my active years, 350-450 per year average, Don usually did about 100 more than me.  OK, I spent a bit more time with my clients, but everyone loved Don anyway!   He was just faster, I think.  But we both worked long hours during the season, also.  And we probably had more than average number of 1120s, 1065s, etc in our practice, fewer simple 1040s.   So I'm sure you'd need to weight for hours as well as number of returns. 

Link to comment
Share on other sites

Phil, I think we all understand that you are trying to get some numbers that can help you decide compensation or whatever.  We also understand that this is a common approach among large businesses.  The key word here is "large."  Walmart and Home Depot need to work with numbers like you are seeking, because over huge data sets trends and meaningful means can be discerned.  Block sure does it.  Maybe a better place to post your question is on an HRB message board. People who work there are very conscious of the number of returns they have prepared in how many hours.  (In my years at Block, I found them to collect so much data and analyze it to death a million ways that it no longer meant anything.  Does it really help to know how many clients either completed their return or walked out between 10 and 11AM on Thursdays in each district in the region?  Data mining can be helpful or overwhelming if attempted to the extreme.)

 

I am an employee at a CPA firm, and I have no idea how many 1040s I prepared this season (with all the extensions, I'm not done yet). I get paid a nice hourly wage.  I also do a lot of work my colleagues and the owner do not care and/or know how to do.  For example, I do most of the research and all the legal research (Code, Regs, court cases, etc.).  I do the returns with 12 rentals or 18 partners.  The boss and I share those with 10 K1s from PTPs, but I get the ones with 12 brokerage accounts.  I also get those clients with complex returns who actually want explanations for every number on the return.  None of this means I can do these returns better or faster than anyone else, but just that I will do them with care and patience.  My boss just thinks it's a better use of his time to pay me to do this exacting work than do it himself.  (Right now I'm working on amending 8 years of returns for a client in the voluntary foreign account disclosure program and just completed THIRTY TWO Forms 5471.)

 

So how much should I get paid?

  • Like 4
Link to comment
Share on other sites

Sara, I'm hurting just reading that.  

 

But I totally understand, in fact, you just reminded me of the real reason I did fewer returns than Don.  He loved to give me those types, although I never had any with 12 rentals or 18 partners, or with 12 brokerage accounts.  Thank goodness.  Nine rentals was my max, but what I had a lot of was clients with 3-6 rentals, plus a Sch C plus a farm, plus a K-1 or 2.

Link to comment
Share on other sites

What matters is how you compare YOUR employees as they are the ones you have to pay.

 

I'm a sole proprietor with about 100 returns, but probably only 75 or fewer 1040s.  None are less than an inch thick.  Dozens of K-1s or 100s of pages of 1099-Bs or multiple states or multiple businesses or all of those.  Changes each year.  Just received a call tonight from a wife who'll probably divorce her husband this year.  Many clients start and end businesses, trusts, change jobs, with all the questions each life change brings.  The client that took only an hour or two last year might take two days next year while I train them on what information to track for that new change in their life.  I don't think I'm slower than you.  I think I have more complex &/or more tedious returns than you.  Can you really learn anything from the fact that you do 100s more returns than I do?

 

I can tell you how I price my returns, but that isn't what you asked.  I have no employees to pay for tax preparation, so it's not that I don't want to share -- I have nothing to share about how I pay my nonexistent employees or how many returns they prepare.  Someone else might expound re their employees, but be happiest with the one who calms their clients and keeps them coming back year after year and not the one who's the most "productive" based on number of returns prepared.

  • Like 2
Link to comment
Share on other sites

At the firm:

6 year round employees. 4 are preparers.

2-3 seasonal preparers - Feb 1 - Apr 30

~3,000 returns. Returns from all 50 states. 60% mailed in. Most 1040. 60 S-corp, 28 Partnerships, 5 trusts, handful of estates each year. 2,000+ have schedule C. 700+ have rental properties. 500+ have more than 20 stock transactions, with about 50 that have 200+ stock transactions. 325 extensions this season. Since Jan 1, 35 responses to CP2000, 75 amendments for various reasons. 10 clients with identity theft issues. Hundreds of phone calls to explain information on the tax returns and answer questions.

Office hours Feb. 1 till Apr. 30. Mon-Fri 9-9, Sat-Sun 9-4.

Now if this helps you with your calculations, go for it. This has been the pattern and approx. numbers for the past 5 years.

  • Like 1
Link to comment
Share on other sites

I have no employees either.  I believe that to date I have prepared 274 client returns; which includes Federal and State; sometimes two up to six states.  Mine are not all 1040s either.  I have a good percentage of Sch C and Rental returns.  I think the most rentals any one client has is about nine.  I have clients with investments; some extensive.  I, also, spend a lot of time with my clients because I believe they deserve that.  There is just no way to put an hourly wage on my production.

  • Like 1
Link to comment
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Restore formatting

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
  • Recently Browsing   0 members

    • No registered users viewing this page.
×
×
  • Create New...