fbpx

Accountants Corner

Learn from my mistakes

The accounting industry lovesss keeping firm practices secret. No one’s allowed to know anything about what anyone else is doing.

And, well, that’s lame as fck. A rising tide lifts all ships. Sharing our experiences and helping each other only helps the industry.

Here’s a list of some of the things I’m doing in my firm, the logic behind it, and things I might be working on.

All I ask is that –

  1. you share this with your colleagues
  2. you let me know if you have any ideas for improvement

📚 Table of Contents 📚

    • My Pricing
    • My Tech Stack
    • How to Ask for Reviews
    • Random Niche (but useful) Tax Facts
    • Interesting Niches
    • How to Send Referrals

🤑 My Pricing 🤑

I don’t really value price. I know I’m supposeddd to, but I don’t. I typically based on a combination of the following flat fees and a case-by-case complexity multiplier.

I use a spreadsheet to quickly price low-ticket annual tax compliance work (eg, simple personal returns), give rough ballpark estimates during sales calls, and make sure I don’t accidentally quote too low. These prices are a starting point and I might quote higher based on how complex a client may be.

Personal tax returns (Form 1040):
I don’t itemize my invoices. This is just for my own quick reference.

Base: $300

Plus relevant forms and situations:
👉 Sch A: $75
👉 Sch D: $50
👉 Child Tax Credit: $50/per
👉 Education Credits: $50/per
👉 Moved states: $150/per
👉 Multiple states: $100/per
👉 Sch C (< $75,000 gross): $125
👉 Sch C (>$75,000 gross): $125 + gross / $250,000 * $100
👉 Sch E: $150/per
👉 Simple K1s: $25/per
👉 Complex K1s: $50/per
👉 Fancy Trades: $75/type

Business tax returns (Form 1120/1120S/1065):
These formulas might seem needlessly complex, but they help the price scale with gross revenue. It’s an imperfect way to price and some accountants will say that the same amount of work goes into a $350,000 gross business as a $3,500,000 gross business, but in my experience, as gross increases, the businesses, their accounting, and the transactions they’re making tend to get more complicated.

Base: $1,000

Plus relevant forms and situations:
👉 Gross >$100,000: gross / $250,000 * 250
👉 More than one shareholder/partner: [# of add’l partners] * $50 * ( 1 + gross / $250,000 * 0.01)
👉 More than one state: [# of add’l states] * $250 * ( 1 + gross / $250,000 * 0.01)

💻 My Tech Stack 💻

Software:

  • Scheduling: Calendly (alternatives: Acuity)
  • CRM: Pipedrive
  • Project Management: ClickUp (alternatives: Teamwork, Asana, Trello)
  • Secure Portal: Canopy
  • Tax Prep: Drake Software
  • Accounting: Xero
  • Newsletter: Convertkit

⏱ Getting Tax Docs from Clients ⏱

There’s no perfect solution to getting all the tax docs you need in a single organized and timely package. But, there’s a few things you can do to make it easier.

  • Send an early January email blast, reminding everyone about the tax prep process, what to expect, and what has changed. If you have a lot of 1099 and year-end close work, you reallyyy gotta time it right so you aren’t inundated with emails. I’d suggest around January 15th.
  • Raise prices $50 across the board and give a discount for people that get tax docs in before a specific date. This is essentially a polite way to charge more for stragglers that send things at the last minute. I suggest setting and communicating a threshold for the discount. For example, ‘to receive the FavoriteClient Discount, you need to sign my engagement letter, complete the tax organizer, pay the deposit, and give me all major tax docs by 2/28.’
  • Use a portal that can guess what they need based on a tax organizer. I use Canopy Tax and, at the end of the tax survey, it’ll guess what forms they need to provide.
  • Set strong policies that you can’t begin until everything is in (eg, all known tax docs, engagement letter signed, organizer submitted, deposit received, etc).
  • Accept that people are people and there will be waves to your tax season. Let them send it whenever and just extend people that arrive after March 20th 😋

😶 How to Ask for Reviews 😶

There are two kinds of reviews: short, quick-ask reviews and long, customer-interview reviews.

Short reviews:

I usually ask for quick reviews from small, limited-relationship, annual tax compliance clients. I’m just not building enough of a relationship with them or adding enough value to warrant a longer, multi-paragraph testimonial. In my practice, that’s mainly personal returns and super simple business returns.

I ask all my small clients that’re either 1) super appreciative or 2) moderately appreciative and are a returning client. Super appreciative clients are thrilled with your work and thankful. Returning clients liked you enough to return 😋

You can use a simple ask. Here’s mine: “Also, if it isn’t too much to ask, I’d really appreciate a review. 🙏 It helps. https://www.google.com/search?q=eckstein+tax+services” [Eckstein Tax Services is the DBA of my local practice.]

Tweak it then add it at the end of your final email to an annual client before fully wrapping up. I typically add it to a ‘I’ve filed, your return has been accepted, expect a debit/deposit’ email.

🧠 Thoughts on In-Person Networking 🧠

Digital is the new hotness, but in-person networking undoubtedly works, has built plenty of practices, and shouldn’t be written off just yet. If you’re a morning person, enjoy socializing, and have the time for meetings, you should definitely give in-person networking a shot.

Tips for success:

  • Start with one or two networking groups max.
  • In-person networking is more about building connections and strong referral relationships than the number of cards you collect at the end of an event.
  • Proactively schedule one-on-one coffees or lunches with people from networking groups.

If you’re reallyyy into networking, check out the book ‘Never Eat Alone’ by Keith Ferrazzi

🏛 Tax Facts 🏛

Here’s some fun facts I’ve learned over the years. Some of these are years old tho, so please check them before using them on a client file.

Penalty abatement:

  • First-time penalty abatement: People frequently claim first-time penalty abatement is once-in-a-lifetime. But, this IRS chief counsel memo implies differently. This memo can’t be used as precedent but it’s handy.
  • Failure-to-file penalty for small partnerships: If you forgot to file an extension for a small partnership (less than 10 partners), check out Rev Proc 84-35. The IRS will waive penalties on a small domestic partnership where all the partners reported their share of income/deductions/credits/etc. Even tho tax laws have changed over the years and the section it references isn’t in the IRC anymore, the IRS confirms Rev Proc 84-35 is still valid.

Misc:

  • Federal extension payments are considered voluntary payments and can be reassigned to other tax years, before a return is filed. This is useful for tax years outside the normal statute of limitations on refunds. If your client filed extensions with payments but never filed the tax return. Get Power of Attorney, call IRS PPS, and try to get any excess payments reassigned to the current tax year. Then, file the returns and claim the refund.

States:

  • Most states without income taxes have various business taxes.
    • Texas has a gross receipts tax called the Franchise Tax. You still need to file a return, even if you owe $0.
    • Washington has a gross receipts tax called the Business & Occupation tax.
    • Tennessee has a slew of taxes including the Franchise and Excise tax and the Business tax (yea, it’s literally called Business tax).

🧪 Interesting Niches 🧪

  • Construction – incl. completed contract accounting
  • Cannabis – incl. Section 280E, cost accounting, unbanked
  • Ecom – incl. cost accounting, SALT
  • Brick and Mortar retail – incl. cost accounting
  • Wineries, breweries, distilleries – incl. cost accounting, additional alcohol compliance
  • Law firms – incl. trust & IOLTA accounts, three-way reconciliations
  • Real estate investing – incl. depreciation, cost segregation, complex transactions
  • Trusts & estates
  • Crypto
  • High-net worth
  • Startups – incl. raising capital, attested financials
  • Hospitality
  • SALT incl. complex nexus, overlapping laws
  • Foreign incl. foreign tax treaties, foreign reporting requirements

🤝 How to Send Referrals 🤝

I accept and greatly appreciate referrals 🙏

Here’s a few things you’ll need to know about sending referrals:

  • Feel free to give clients my contact info
  • I don’t pay referral fees. I willll send you a shirt tho.
  • I won’t intentionally poach your work (eg, if you’re a bookkeeper, I won’t intentionally chase the bookkeeping work).
  • I won’t refer your clients to your competition (eg, if you’re a financial advisor, I won’t suggest they use another financial advisor).

Unique areas I have experience with:

  • NYC S-corporations
  • Personal taxation of RSUs
  • Marketing & creative agencies

Areas I absolutely don’t work in:

  • Sales tax
  • Outsourced payroll
  • Cost/inventory accounting
  • Trust & estates