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Billing customers with complicated tax returns

Level 1


We got a client in the  automobile industry who is  making over  50 M/ in 2020. They run their business  through 6 Entities that we have to keep up with . We as CPA firm doing a lot of communications, preparation work to catch up with filling his tax returns. 

We agreed  about the hourly rate for special projects like Taxes, consultation, tax planning ,etc.  to be $300/Hour. We  do have tax attorneys and Cpa's  who work in those assignments . We also have  separate monthly Bookkeeping agreements to review all his accounting work on monthly  basis. He  think that with that monthly agreement it  should cover everything .  We trying to find fair billing system for his special projects. He gave  us a lot of work outside the scope of our monthly agreement. He always forget about those  orders and urge about  the bill for those  special projects. Any idea how to handle such issue in systematic fair way. Thank you, 


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2 Comments 2
Level 15

If you are billing out at $300/hour, you must have someone there that can write a decent engagement letter to lay out the services you are providing and the cost of each of those services.

Slava Ukraini!
Level 15

"He gave us a lot of work outside the scope of our monthly agreement"

Which you don't do until he signs off acknowledging it is Outside the Scope and agrees to be billed as an Additional task on an As Requested scale.

Or, it is becoming routine and it's time to add it as Additional Scope = a Change Order with the new additional service fee.

"We also have separate monthly Bookkeeping agreements to review all his accounting work on monthly basis. He think that with that monthly agreement it should cover everything ."

I treat these as, "If you want to do your own work and agree to follow our directives, then the time it takes to do this naturally goes down, and the service fees for these also go down, by itself." Because he is learning what it is supposed to be, the first time it is handled.

Or, "When we do the review of our own work, we don't charge extra for our own follow up. But if we are reviewing work we did not perform, this is charged separately. All of this saves time in the tax prep cycle; you would pay for that at one stage or the other."

Because there is often not enough time to do it right, but always time to do it over.

It really depends on the Client's participation in the development of the process. I have some clients that have almost nothing to fix by year end. And I have some clients that keep trying to "slip one past me."

And here's a big Value Added perspective: look at how the tax regulations keep changing, nearly daily right now. Point out that you are the ones staying current on this topic, but he should focus on running a successful business, and not try to take on both responsibilities.

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