What are the Options for Setting My Prices as a Tax Preparer?
By Tim Frye
When it comes to setting your prices for your services as a tax preparer, you may be puzzled as to which method is going to make you the most money. Pricing your services can be relatively subjective; the billing method can depend on the tax preparer’s style, experience, and employment classification. This article will discuss the different ways that a tax preparer can bill his or her client, and will go into the pros and cons of each billing method.
Flat Rate Tax Preparation
When you are looking to gain clients, let’s say you have just opened up an office. It may be helpful to just advertise flat rates to your first portions of clientele to keep it simple. For example, you just charge regular rates of $55 for a short form no matter the amounts of additional credits involved, and $110 for a long form, no matter how many deductions and forms used.
This method is good for when you are looking to develop a niche market, and keep your general operations simple and transparent. Many times a taxpayer will come into an office with an assumption of price range due to a tax preparers marketing campaign, only to see those prices raised with fine print contingencies that the person never read. This situation can upset people, and may cause them to turn their back on you, and you will subsequently lose them for good.
Should I Bill My Tax Clients By the Form?
There are many tax preparers, and tax preparation companies, that use the “bill by the form” method. They will have a set origination point for a the short and long form, and then depending on the additional forms required that are applicable for the client’s overall tax situation, additional fees will be attached to each of the forms. For example, if a person comes in and has a Schedule A along and is also self -employed and reporting income and expenses on a Schedule C, the price could come out to around $220. This would still be a relative bargain compared to what some companies charge for like kind services.
The pro of this method is that you can generally bill more when you bill by the form, especially later in the tax season when people with more expanded financial capabilities start rolling in.
The con of this is that you may surprise people with the final price assessment, so it may be wise to inform them beforehand that you are charging them by form, and that the price used be different from the base rate.
Should I Prepare Taxes and Charge by Time?
One can also choose to bill their clients according to the amount of time it takes to complete their return and get them out the door. This method is often employed by those with more experience, who have a higher value placed on their time, and charge accordingly. Some tax returns take longer than others to complete, and that is not always because of the material work involved. Let us not forget that God made us all different, and each client situation along with their personality must be assessed and evaluated accordingly.
The pro of this method is that you are not going to have your time wasted, and a client choosing to talk more than usual will indeed pay the price for it.
The con of charging tax clients by time is that you eliminate part of the super short form market, because those tax returns take very little time to complete, and you cannot really get a good return on the business. These short forms will make up the meat of the first month and a half of a tax season.
Every client is different, and every tax preparer’s personality and level of experience will differ greatly as well. So it is really up to the preparer to decide which way to go when it comes to billing methods. Remember that no method is set in stone, and can be altered and fitted to different situations.
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