I recently read this in a forum of business owners online:

“I like my accountant, but how much does it cost to get your tax returns filed?”

They were looking for opinions to see if what they were paying was out of line. I see questions like this come up in different forums all the time. I will give you a straightforward answer that will benefit any service provider.

There is no going rate for CPA tax filing.

I learned this years ago in some industry meetings conducted by a couple of consultants. They gave a set of facts about a client and asked a room full of accountants “How much would you charge to prepare this tax return?’

They conducted this experiment all across the country. And came up with surprising results. The accountant’s answers were all over the board. They got price ranges from $100 to $2,000 for a (pretty simple) personal tax return.

One may think the CPAs in California or New York would have charged more than someone in Iowa or Michigan. Nope.

Neither the complexity of the return nor the preparer's location seemed to influence the answer.

What was the real issue? It was all based on the tax preparer’s confidence in charging a higher fee.

Why is this important to you? Because the same applies to any service provider in any industry. There are no going rates.

The true value of the services you provide are tied directly to the results you provide for your clients or patients. The bigger the problem you solve for people, the less price becomes relevant.

Case in point - think if you went to the hospital because of stomach pains. The doctor says they need to do emergency surgery and remove your appendix. Otherwise, you could die.

• Are you going to stop and ask the surgeon how much the surgery costs?
• Or try to negotiate with the hospital to see if you can get a better deal?
• Maybe you want to ask around to a few other surgeons and compare proposals.

Of course you’re not going to do any of these things when it’s a matter of life and death. See how the severity of the problem just made the price irrelevant?

This still applies even if you don’t deal with life-and-death circumstances. Any service provider has the ability to improve the quality of life for the people they serve.

What is the result you want with your tax filing?

As a financial consultant, I have the good fortune to be able to quantify results for our clients with numbers.

We guarantee, for the right clients, to find enough in missing profits and unnecessary taxes in each year to provide a return on our fee. What is this worth?

You can look at this a couple of ways. Imagine you went to a casino and they were playing this new game where you put down $5 and won $10 every time, guaranteed. How long would you play that game? I would play it until they kicked me out.

Let’s look at it another way. What is an extra $30,000 worth in your business?

That’s an after-tax number. So to generate it on your own, you’d have to make closer to $50,000 pretax. Assuming a 40% combined federal and state income tax on your earnings.

And those are net earnings. You had expenses to produce those earnings in your business.

Most companies shoot for an average 20% profit margin. So to generate $50,000 in net profit at a 20% margin, you had to produce $250,000 in revenue.

What is that worth to you now? How long will it take to produce $250k in revenue? For most of our clients, it takes them much longer to produce that than it does for me to save them $30,000.

And there’s the value - shortening the learning curve and, in this case, the earning curve. Helping them reach their financial goals faster than they could have on their own.

How does this apply to you in your business? You need to be in tune with how your service affects the lives of your clients, patients or customers. It is not a few minutes of your time they are buying. It is your knowledge, expertise, and the result you provide.

In the case of shopping around for an accountant, what result do you really want? Do you want someone who will only file your forms for the lowest price?

Or do you want someone who will help you reach your goals by driving profitability and reducing taxes?

The answer should be obvious.

BYLINE
Eric Levenhagen, CPA CTS is the only financial consultant who helps private practice optometrists improve the financial health of their practice with a simple, proven process called Financial Harmony which will reduce their taxes and increase their after-tax profits by at least $30,000 in the first year, guaranteed.