This is usually the biggest concern for many prospective clients. The truth is that while it is an important factor for the prospective client, it is often also a major unknown the professional accountant.
Professional Fees: What to expect and is considered reasonable?
To give you an example, it is not uncommon to have a situation with two clients with identical tax needs, information, and documents where the time required to diligently perform the services is quite different from one to the other. This would be reflected on the final invoices. This is simply due to the fact that some clients will be more organized, have all their information available in a much shorter period of time, respond much more quickly to requests, avoid repetitive deliveries, while others will require additional review time, visits and email / telephone communications on the part of the accountant. Making an accurate estimation of the fees is a lot easier for situations involving returning clients. In those scenarios, the accountant will have a better idea of what is involved, what needs to be done and how the preparation process is likely to go.
For new clients however the situation is quite different. To some clients, it may seem like the accountant is trying to hide the cost but the reality is usually quite different. Remember that when you first approach the new accountant, you and your previous tax preparer at that point, have a much better idea of what needs to be done and how much time will be required to complete the services. That is not to mention the fact that the new accountant has no knowledge or experience of the particularities of the tax and accounting situation of the new client to help him/her determine how much assistance will be required to be able to satisfactorily serve the new client.
Solutions and recommendations:
- Do your research to inform yourself about the accountant’s general fee policy, schedules and rates. Inquire as to what the billing structure and the hourly rate are from the accountant or from his website. (See Our Fees)
- Confirm and request that a detailed invoice for the services performed will be supplied once the services are completed.
- Make sure you are as prepared and organized as possible and respond to requests for additional information from the accountant as quickly as possible. (See Are you ready…?) .
- Verify the accountant’s client references to determine if he has been reasonable and worth his fees in the past. References are often available from the accounting firm’s website, Google Listing Reviews and on their online appointment reservation systems.
- Ask the accountant if he will honor the fees charged from the previous year’s invoice as an estimation and a starting point for the first year. That is assuming the current income tax return preparation and accounting services required are comparable to the ones from the previous year.
Conclusion: The determination of the number of hours of service and schedules required is essential to be able to reasonably estimate the amount of billable time to develop a fair, accurate and reasonable quote for the new client and accountant. Otherwise, if the accountant’s quote is inaccurate in the end, the result will not be seen as fair to the client and neither to the accountant.
Word of Advice: Remember that a good accountant is not just about what you have to pay in service fees. His services can and usually are worth a lot more than what appears on your invoice, if his/her serviced were of high quality, taxes were minimized and saved you from some major headaches down the road if you ever get audited.
Money isn’t everything, but it is still an important factor!