CPA Billing Question

[RockSplat]

Thanks for reading my question.

About me: full time employee with side business.

About a year and half ago I met with a CPA that I thought I was going to do business with. On the phone he said our initial consultation was free. When I met with him I decided to use his services and he said in that meeting there would be a little charge for this meeting which was an example of how he billed. He says, of course, his bill is all based on time. The meeting lasted about an hour. Again, on the phone initially when I first called him he said the first meeting is free from the best I remember.

Since that meeting I emailed him a few questions such as questions about SEP IRAs, need for attorney for my business, etc. I don't think he would have spent more than 15 minutes on the email.

He set me up with estimated taxes and says he did a projection. I don't think he did a projection really as we figured out estimates during the onsite meeting. It was a guess. So with this I can't imagine him spending more than 30 minutes.

I received a bill for $200 for the meeting and my email questions. He says this is a bargain since his normal rate is $250/hour.

Should I pay it and be done with it? If I rightfully owe him the full $200 then I'll pay it but it seems kind of sketchy.

----

Next question -- I have a CPA that I really like now. We met initially and he said he could file my taxes for $350. I got the bill and it was $495. I can admit that I may have been a little more complicated than normal. I had a lot of deductions and wasn't the best organized. We did spend an hour initially and there was no charge for that meeting (supposedly). After the meeting we met an hour again to file the taxes.

Is this normal for the quote to be $350 and get a bill for $495. I emailed asking why but did not get a response. He ended up filing taxes for me and my wife as well as for my business. He also helped me convert to S-Corp although I am the one who did the paperwork with IRS.

I tell you I am extremely happy with his results. But other than being a little loose in my organization, we pulled all info together in an hour meeting and a few follow up emails. Other than that it was pretty simple.

Just curious if I should hold back and get more info or just pay and be done with it.

Thanks!

[TomCat]

Quote:

Originally Posted by RockSplat Thanks for reading my question. About me: full time employee with side business. About a year and half ago I met with a CPA that I thought I was going to do business with. On the phone he said our initial consultation was free. When I met with him I decided to use his services and he said in that meeting there would be a little charge for this meeting which was an example of how he billed. He says, of course, his bill is all based on time. The meeting lasted about an hour. Again, on the phone initially when I first called him he said the first meeting is free from the best I remember. Since that meeting I emailed him a few questions such as questions about SEP IRAs, need for attorney for my business, etc. I don't think he would have spent more than 15 minutes on the email. He set me up with estimated taxes and says he did a projection. I don't think he did a projection really as we figured out estimates during the onsite meeting. It was a guess. So with this I can't imagine him spending more than 30 minutes. I received a bill for $200 for the meeting and my email questions. He says this is a bargain since his normal rate is $250/hour. Should I pay it and be done with it? If I rightfully owe him the full $200 then I'll pay it but it seems kind of sketchy. ---- Next question -- I have a CPA that I really like now. We met initially and he said he could file my taxes for $350. I got the bill and it was $495. I can admit that I may have been a little more complicated than normal. I had a lot of deductions and wasn't the best organized. We did spend an hour initially and there was no charge for that meeting (supposedly). After the meeting we met an hour again to file the taxes. Is this normal for the quote to be $350 and get a bill for $495. I emailed asking why but did not get a response. He ended up filing taxes for me and my wife as well as for my business. He also helped me convert to S-Corp although I am the one who did the paperwork with IRS. I tell you I am extremely happy with his results. But other than being a little loose in my organization, we pulled all info together in an hour meeting and a few follow up emails. Other than that it was pretty simple. Just curious if I should hold back and get more info or just pay and be done with it. Thanks!

Seems like you have great knowledge of what time your CPA spent in addition to your face to face time. Also, you seem able to define how "simple" the CPA's work is. IF you were my client I would write off the bill and suggest you find a source that may meet your "expectations" more satisfactorily. But that is just me

Other approach you may take might be to stick with the current CPA...who you said you were "extremely happy with results"...pay his bill and in the future work harder to define the cost of each project. The "estimate" of $395 most likely did not anticipate converting your corp to Sub S and probably assumed your data would be submitted in an organized fashion. Also, remember that professional must charge for e-mail and phone time as it does constitute a meaningful portion of their day. Also, be sure to find out what the CPA's hourly rate is as that may vary from a quite low number...not sure I would use that guy...to a very high number...maybe $400-$500 per hour...you don't need that guy either

Having a business...even a very small business creates complication that will both frustrate you...and cost you some money. Be sure to budget your costs as you determine what you "price" for your service is.

TomCat

[Amethyst]

Rocksplat - I think you got a bargain. Also, in my experience, "free" initial consultations are limited to 30 minutes...then the meter starts.

OTOH, our tax preparer provides a list of fees for everything. The basic 1040 is $395; everything else, including $10.00 for each 1099, is extra. I was able to calculate his fee almost to the dollar. I hope to be able to "fire" him next year, but it's not because I don't know what he's going to charge. He also charges by the hour for consultations...actually by the minute, since it's in 15 minute increments, rounded up to the next 15 minutes.

Amethyst

[RockSplat]

Thanks. I thought this was a fair price. I just wanted to bounce this off of you guys before moving forward. I will pay in full.

Thanks again. You guys are awesome.

[Nords]

Quote:

Originally Posted by RockSplat Thanks. I thought this was a fair price. I just wanted to bounce this off of you guys before moving forward. I will pay in full. Thanks again. You guys are awesome.

My brother-in-law the CPA says you got a bargain.

This would be a difficult time of year to negotiate CPA fees... you'd have to wait until May when they've finished recovering from tax season. He's routinely working 80-hour weeks from late Jan through late Apr.

If you wanted to recover max value from the fees you've paid then you could use these returns as the foundation of learning how to do next year's on your own. The reason I suggest this is because if you're paying "only" $500 to have your taxes done then most CPAs have a hard time making money from your business. They're under pressure to finish the return as quickly as possible and they don't have extra margin to research issues (or to help you chase down documentation). As a result they're not very interested, they don't want to spend much time on your return (let alone with you), and you may feel that you're getting short shrift. My BIL's firm has started jacking up the fees on these types of customers (new ones, not the long-time customers) specifically to drive them away so that the firm can focus on the more expensive returns with higher margins.

You're lucky that you got your taxes done at all this month. Most CPAs would've immediately filed your extension, given you an organizer &d a checklist to have you collate all your paperwork for them, spent this month on the bigger customers (or at least the more profitable returns), and caught up with you over the next few months.

Another reason to do your own taxes is that you become an expert on optimizing your own tax strategies for your own situation throughout the entire year. Otherwise you have to depend on your CPA to help you anticipate those strategies, and you're not paying them enough yet to merit that advice.

[Amethyst]

"You're lucky that you got your taxes done at all this month. Most CPAs would've immediately given you an organizer &d a checklist to have you collate all your paperwork for them,"

I did all this way ahead of time, went over the resulting return with a fine-toothed comb, caught several mistakes and omissions by the "pro," and still got charged almost $1200, supposedly a "courtesy discount" for filing early. So as I said, Rocksplat got a huge bargain from my perspective...especially since we don't have a business or anything truly complex. Then again, we live in one of the most expensive areas in the U.S., where all services cost dearly.

A.

[REWahoo]

Quote:

Originally Posted by Amethyst ...went over the resulting return with a fine-toothed comb, caught several mistakes and omissions by the "pro," and still got charged almost $1200...we don't have a business or anything truly complex....

So why aren't you using Turbotax or some other DIY tax prep software? Seems to me saving $1,000+ would be worth it, especially if you have to check and correct the work the "pro" is doing for you.

[RonBoyd]

Quote:

Originally Posted by REWahoo So why aren't you using Turbotax or some other DIY tax prep software? Seems to me saving $1,000+ would be worth it, especially if you have to check and correct the work the "pro" is doing for you.

Then how would he (the CPA) make the yacht payment? Come on, give the economy a chance.

[73ss454]

I used the same CPA for 30 years and he usually charged me about $500.00 + a few other fees of about $60.00 or so. He also bought cars from me and we were very friendly.

Last year when I received my bill it was for about $1400. He charged me $350.00 for a 10 minute phone conversation about Roth conversions. Never even taking the time to figure out any #'s for me. Then he charged me another $350.00 because he had to call me because I neglected to supply him with some info to finish my taxes.

This year I used turbo tax, screwed it up a bit and have to do a 1040X but I'm getting the hang of it.

Come to think of it I never even screwed him when he bought a car. (heh)

[Texas Proud]

One of the big problems with 'is this fair' is you do not know the person...

Are the a partner in a large firm? Medium firm? Small firm?

Are the a low level flunky in one of these? Do they really know taxes? Do they REALLY know taxes

I am a CPA and do not really know taxes, but know enough to do a lot if I were doing it... and I did start out as a tax accountant... I can tell you that what YOU think is easy to read and organized can be a nightmare to the CPA.. If you put all of your stuff in a folder that is organized... then get a few late things in and throw them in... well, he has to go back to that form and input that data... Also, a lot of people do not give all the required information... My first year I had 80 returns that were on 'hold' waiting to get some info from a client... some did not want to take the time to talk to you... others talked your head off but still did not tell you want you needed to know...

But to your question... if he did work for you.. you should pay him. If you did not like his work... then do not go back. This is for both of your CPAs.... Now, if he did not do anything... (which from your post is not true.. you just think he spent less time than what he put down)... then tell him you will not pay... but then do not use his work...