'Tis the Season (aka Here We Go Again)

[JJStephens]

If it is April 16, it must be time to think about software for next year.

 

I've used ATX all but two of the past 20 years. Given my case load and fee structure, I'm not sure I can afford to stay with them. Drake is similarly priced so that isn't an option.

 

Here's my gig: in addition to about 110 paid returns I do another 30 or so freebies and a boatload of 990s; I only do a handful of 1120s & 1065s. My fees run about 60-70% what the local big box preparers charge. I'm told I need to radically adjust my fee structure but for some goofy reason, I have a hard time doing that.

 

I recall early in the season getting a couple propaganda pieces from some new players but I didn't have time to give them more than passing notice. ... and now I can't find them.

 

What are some of the other affordable packages you're looking at ... or better yet, have tried and found competent?

 

Perhaps we could turn this into something that would benefit more than just yours truly. If you're able to weigh in I think it would be helpful to those of us who are shopping to share things like:

• Name of the software (and who is behind it)
• Main strengths/weaknesses
• What returns are included
• Website
• Cost
• Whatever else you think pertinent

Thanks for your feedback!

[jklcpa]

I know this isn't what you asked, but I'll put it out here anyway.  I would worry about those low-end, lower priced programs and the support behind them also.

 

Which ATX product have you been using? ATX Max?   Honestly, Max packs a lot into that program for ~ $1,300 and I'd stick with that if you like it and it works well for you. You could try a trial of Drake's software to see how it handles those 990s. I've never done one with their software, so I can't say how easily it handles those.  Drake will probably do what you want for slightly less if you purchase before the end of May, but there will be a learning curve, and not everyone likes it or is willing to put in the time to learn it and adapt after having used forms-based software.  You would have to give it a decent trial run to see if it would be a good fit for your practice and the types of returns you prepare.

 

If you raise your fee by $10 per return you'll have more than covered the purchase price covered for either of those programs.  If I recall correctly, ATX was raising their base rate 10% per year before the early discount.  If clients question the small increase, you tell them that your software increases 10% each year.  You should be raising your rates each year anyway. 

[JJStephens]

Judy, you make some valid points. And I guess a $10 bump wouldn't be that bad. Sure wish I'd thought of that back in January! I bumped my base rate only $3 and left everything else the same as last year. What I probably need is not a new software package but someone with some business brains to come in and run my show for me--I'm too soft-hearted.

 

I've used Max (or it's equivalent, pre-ATX) since back in the early 90s. I left for two years with TRX (they initially offered full-blown ATX for $299, then lost their license to offer it after one year). That was a disaster. A couple years ago ATX offered me $795/yr for three years to come back. That expired this year. With tax and shipping, my renewal will be over $1400. I hoped to find something reputable in the $800-$1000 range. Maybe it's not out there.

 

I agree with you about one more thing: I am definitely not interested in the bargain basement software that seems to proliferate every couple years.

 

I may end up having to bite the bullet. Frankly, I wouldn't be heart-broken if that happens. I'm pretty accustomed to ATX and outside of the 2012 debacle have had pretty good luck with them.

[BulldogTom]

This is just me talking here, but you are giving your services away.  You don't have a software issue (not saying ATX does not have issues, but that doesn't look like your problem).  You have a business model issue.  If you want to place your business in the value category below the Big Boxes, then be at 85% to 90% of their cost.  You may lose a few customers in the short run, but in the long run, where are they going to go?  To the big box to be treated like cattle with no off season support?  How about those 990 clients?  They going to go to the green box for that work?  Or a CPA who is going to charge them a boat load because they have a soft heart for their profit margins and not the client?

 

Again, positioning your practice in  the value range is fine, but do some research on what the big boxes are charging, what CPA's and EA's are charging, and price accordingly.  60% of the big box store is giving it away.

 

You seem to have a great client mix that you can work from.  (Not sure why you would do 30 freebies, but that is your choice.  No value judgments here).  Some are captive (990's, P/S, 1120, and any of your Sch. C's & E's), so those are probably going to stay or get a real education on the going rate for business and non profit returns.  The 30 freebies are not leaving either. 

 

Just my humble opinion.  Have the moderators delete if you don't want to look at it again.

 

Tom

Newark, CA

[JJStephens]

Thanks for your sage input.

 

To be perfectly honest, you're telling me what I already know ... but it somehow sounds so much more valid coming from someone else! I have always felt a little bit guilty for thinking those kinds of thoughts!

 

The majority of my clients are clergy (I'm also a part-time pastor)--I use that as my excuse for sub-market fees. Most of the freebies are either family or retired clergy who have little or no income. I also tend my waive my fee if the client is in the midst of a legitimate hardship.

 

When I started doing this a hundred years ago I was pastoring full-time and my wife was working full-time--what I got from tax prep was gravy. Six years ago my wife suffered a seemingly minor head injury that suddenly turned into a major, life-threatening illness from which she has still not recovered. We lost her income (Social Security has repeatedly denied her disability with the excuse that other people who suffered her injury are able to work so she should be able also) and having to care for her rendered me unable to continue pastoring full-time.

 

So now my consulting gig is all I have now (the small church I pastor contributes a very small amount). About 1/3 of my income goes to pay her med bills. That is what prompted me to search for something less expensive--these days I need to conserve every dollar I can. The truth is that I probably need to do a serious re-evaluation of my business model.

 

Here's the pathetic part of all this (confession is good for the soul!)--part of what I do is business and personal financial counseling. I regularly counsel people like me. And they end up doing very well. If I were counseling someone like me I would be telling me to do things very differently than what I've been doing. You're right. I'm a goofus!

 

Sounds like I have some work to do.

[JMovichEA]

I went to a practice management seminar many years ago with my father, (he was an accountant, I started taxes working for him). One statement made my one of the presenters really stuck with me. "If you do professional work, charge a professional fee".

[JJStephens]

There is a similar biblical principle that says a laborer is worthy of his hire. I teach it, I preach it. I just don't do it! I've always subconsciously based my pricing on 'how little can I charge and still pay my bills and keep from starving.'

 

If you could see me now you would notice that I have a stupid sheepish grin plastered all over my face as I slowly shake my head.

 

This is timely in another way. Over the past month or so I had come to the conclusion that I was going to have to adjust my consulting/accounting fees as well (they have been similarly under-priced). I had come up with a tentative plan that involved a nominal increase. I've been kicking myself for not having already sent out the new price sheet. Now I'm glad I didn't. I think I'm going to have to approach it with a different perspective.

 

Hey everyone, thanks for your input and allowing me to think out loud. This has been really helpful.

[jklcpa]

JJS, I too am guilty of undercharging on some, mostly because I have very long-term clients and it is a mistake to not raise prices each year to keep up with what the competition is doing or allow the fixed expenses to become a larger share of the revenues coming in.  I didn't raise my prices the year the economy fell apart, and so each year I have that shortfall as I raise by a percentage of the prior year, where if I hadn't skipped that year's increase each year after that would have been higher.

 

I raised prices by 10% over last year, and I may do that same again this year.  We can only shave so much off the expenses instead of raising revenues. I've shaved everything considerably.

 

I know that I could take on more work, and I've started asking clients for referrals.  I never take price shoppers and almost never accept people that call from the phone book.  If you have some balkers at your price increases, you could offer them an after-the-fact discount if they refer new business. It could be small, like $10, but it will help your practice grow and will help to replace any that leave over your raising prices.  I doubt you'll have many leave though.

[JJStephens]

Since I'm in confession mode--here's another lulu (that Judy's last post reminded me of). Last year when I entered my price list in my haste I inadvertently used a three year old price list as my starting point for computing the increase. Even with the 'increase' my fees last year ended up being about 2% less than the year before.

 

You know, as I read back over this thread, I'm coming to the same conclusion some of you are coming to-- ole Jerry ain't so bright, is he?!?!?

[joanmcq]

My 1040 & Sch. A fees each go up by $5 every year, as does my per hour fee. I'm working to get the base Sch. C up to $100. That covers the cost of the software. I also started billing at full price to anyone I discount and then showing the discount in stead of just discounting off the top.

[mcb39]

Well, I am in the same boat as JJStephens.  All I have heard the past few days from my new Assistant and my Husband is "You have to raise your prices!"  Easier said than done, but I am working on it too. 

[JJStephens]

Here's a FWIW relating to my original post.

 

I found an outfit online called Sigma Tax Pro. I got mildly excited when I discovered they offer full-blown Drake software for $495. One of their reps just called me. Turns out they REQUIRE use of one of their two bank products with a minimum fee of just under $95/return. Scratch that one.

[Lee B]

If you are willing to drop down to the next level, you could take look at Tax Act or Tax Slayer,

 

but they would only save you a few hundred dollars, plus you get what you pay for.

[Lion EA]

Put together your plan as if you're consulting for one of us.  Probably $10/return increase, new clients at the full prices you're aiming for, freebies asked to pay $10 each toward (pick one) license fee or pay-per-return or e-file fee or overhead or..., always show full prices on your invoices with their true discount shown, charge for initial meeting/consult/questions for potential clients with fee applied toward their tax prep fee if they become customers, etc.  If you end up with software where you buy the modules separately, you may need to drop your entities.  Or, your only competition for entities, including 990s, is really CPAs, so you should increase their returns $25 or something more than $10.

[JJStephens]

Great ideas. I already show the full fee and the discount.

 

I think I've decided to bite the bullet and either stay with ATX or maybe jump to Drake (I had already schedule some time to do an evaluation and am scheduled to attend one of their seminars in early May. I'm about 99% sure it will be one of those two.

 

Again, everyone, thanks for the great advice.

[Jack from Ohio]

Great ideas. I already show the full fee and the discount.

 

I think I've decided to bite the bullet and either stay with ATX or maybe jump to Drake (I had already schedule some time to do an evaluation and am scheduled to attend one of their seminars in early May. I'm about 99% sure it will be one of those two.

 

Again, everyone, thanks for the great advice.

You will hate Drake.  2013 tax year I used both.  I will not go back to Drake for any reason.  Drake is not intuitive enough for me.

 

2013 I raised my fees 25%. (not yet to the 80-85% mark Tom used)  I have 200+ clients.  I had 1 client complain and two ask.

 

2014 I raised my fees an additional 16%. Still not to the 80-85% benchmark. I may have lost a few clients, but have gained several new clients that didn't even blink at my new prices.  More income than 2013.  When we price our professional services at Wal-Mart prices we hurt our entire industry and other tax professionals.  I have chosen to stop doing that.   

 

I am now an IRS licensed professional with 18 years experience and have decided if my prices are the reason some left, I am not losing anything.  In the last two seasons I have had a total price increase of 45%.  If I lose some customers, I have less work to do and make more money.  The concept truly does work. 

[JohnH]

I completely agree with the fee issue. Most preparers I know tend to undercharge, so there is lots of room for them to increase fees. But as much as I agree with the fee increase approach, i disagree to the same exten with respect to Drake software. Given the quantum leaps in speed and efficiency Drake clealry provides, I'd have to say that anyone who ends up hating Drake also hates earning more money. It really is just that simple.

I have found Drake to be very intuitive once a person devotes the time to reach a reasonable level of software transparency. But the learning curve can be steep if one approaches Drake with a closed mind. A bias toward the crutch of forms-based data entry is also a barrier which some people just can't overcome. But once the user opens their mind and begins to evaluate the entire user experience, it is impossible to ignore the efficiency aspect.

So the decision is less about bells and whistles and more about answering the business question of "What makes me the most money?". In my case, that's a major issue since my reason for being in business is to mximize profits, and is the reason I'm convinced that Drake is the answer in this price range. SO it offfers anyone increasing their fees to also increase their profitablity exponentially, if they have the courage and business acumen to do so.

Edited April 17, 2015 by JohnH

[JJStephens]

Interesting.

 

I'm probably a bit too much of a people person for my own good. That's a good trait when I have my pastor hat on; not so good when I have my biz pro hat on.

 

As for Drake--I've reached a point that it is the only thing I am willing to consider in lieu of ATX. During my one year off from ATX I used a product that was somewhat similar to Drake. It took a bit of learning but I got the hang of it. I've demo'd Drake half a dozen times during my 28 years as a preparer. What I've discerned is that those who love it really love it and those who don't really don't. Over the next couple weeks I'll find out which I am from the demo I ordered.

 

Anyway, I'm excited to launch my 'reinventing the way I do business' project over the coming days and weeks. Thanks again for all the great input.

[JohnH]

Here are a few suggestions. Pay attention to the speed. Notice such things as load speed, how quickly you can navigate within the program, how fast you can change from one client to the other through the client manager, and how easily you can swtich between the input mode and forms display. Approach it from the standpoint that "fast and nimble" is normal & expected.

Don't try to make it act like ATX (in exactly the same way that you wouldn''t expect ATX to act like Drake). It is a totally different environment, which I think is a huge plus. Run backups a few times and notice how they''re done before you can blink. It will perform in exactly the same way when you begin to load the program with client data. You'll probably notice that you don't need a NASA-quality computer to run Drake; it's very resource-efficient.

There are some macros embedded in the program - you should run one or two of the simple ones just to see how they work. These are a valuable feature in the program once you learn how to use them. You can automate many tasks affter spending the time to learn how macros work in Drake - they are a valuable feature.

Finally, and most importantly, I'd suggest envisioning yourself with 15-25% more free time, which you can use to take on additional work (or take the time off if you wish). I've heard skeptical questions about this assertion on several occasions and other forums, but I stand by it. The only people who make this discovery are those who are willing to invest the time, change their thinking, and apply thier reasoning skills in making the best business decision.

[Yardley CPA]

JJ...obviously every program has their pluses and minuses and I do believe you get what you pay for in most instances.  With that said, I'd like to comment on the suggestions that you need a NASA-quality computer to run ATX.  I am a long term user of ATX (going back to the days of Parsons) and have not had any issues with performance or speed.  I can only speak to my experience working on a 3 year old Dell.  Hummed right through tax season with no problems at all.  Good luck with your search! 

[Cathy]

JJ...obviously every program has their pluses and minuses and I do believe you get what you pay for in most instances. With that said, I'd like to comment on the suggestions that you need a NASA-quality computer to run ATX. I am a long term user of ATX (going back to the days of Parsons) and have not had any issues with performance or speed. I can only speak to my experience working on a 3 year old Dell. Hummed right through tax season with no problems at all. Good luck with your search!

Humming right along doesn't mean the speed at which it humms can't be greatly improved. I too have a fairly new computer and am so disappointed in the speed at which the program opens and operates in general...snail's pace! I'm tired of being told I need to upgrade my computer almost yearly for a tax program that could be programmed more efficiently than it is. After this past tax year, especially, I have come to the conclusion that I will no longer tolerate the second rate tax program ATX offers. The effort I have to put out in the conversion from ATX to Drake will more than pay the dividends for the tax year of 2015

I have been loyal to ATX for too many years....while paying retail each year at that! I can't believe I put up with paying retail each year because I didn't jump ship when it would have been so easy to do so.

[RitaB]

The majority of my clients are clergy (I'm also a part-time pastor)--I use that as my excuse for sub-market fees.

All right, I cuss a little, but I love Jesus. And here is part of your problem - clergy (at least here in my little town) sometimes come across as feeling entitled to more for less. My mother used to practically give away her work to clergy. I undercharge everybody, but I don't undercharge clergy more. I have no problem telling them I have a ministry, too. My ministry is feeding my kids. And my kids are leaders in church and everybody has a ministry, not just pastors. I was furious that my pastor talked a kid out of playing professional baseball because he was needed on the church staff. What???? You can't witness on the baseball field????

OK, sorry I got off on a rabbit trail there. And, yes, my pastor makes more than me. He can pay for tax prep - they gotta get over thinking we owe them something. Nobody owes anybody anything, and yes, a workman is worthy of his wages.

[Jack from Ohio]

All right, I cuss a little, but I love Jesus. And here is part of your problem - clergy (at least here in my little town) sometimes come across as feeling entitled to more for less. My mother used to practically give away her work to clergy. I undercharge everybody, but I don't undercharge clergy more. I have no problem telling them I have a ministry, too. My ministry is feeding my kids. And my kids are leaders in church and everybody has a ministry, not just pastors. I was furious that my pastor talked a kid out of playing professional baseball because he was needed on the church staff. What???? You can't witness on the baseball field????

OK, sorry I got off on a rabbit trail there. And, yes, my pastor makes more than me. He can pay for tax prep - they gotta get over thinking we owe them something. Nobody owes anybody anything, and yes, a workman is worthy of his wages.

AMEN!

[kcjenkins]

JJ. I want to bring up one more thing.  You need to talk to a REALLY GOOD SS Disability attorney.  They only charge when they get the disability, and while it should not be this way, it often is true that the SS personnel do not 'play fair'.  But faced with an attorney, they do react differently.  And the fact is, it is not WHAT sort of injury it was, it is HOW IT AFFECTED HER.  Regardless of how others may have been affected.  Please do not just give up.  There are so many being given disability for ridiculous reasons, any legit claim should be fought until you get it.  

 

As for the price issue, just remind clients that the ACA, on top of all the other changes, has made the tax software more expensive, so the fee increase is not really to make you more PROFIT, but just to keep up with your costs.   

[joanmcq]

The speed issue is a factor if you have a high volume practice and/or prepare returns in front of the client. I don't have either of these, so I've found things to do, like review the client documents, prior year file while waiting to get the return or program or whatever to open.

Now 2012 was another story altogether!