Should I find a new accountat?

June 19, 2021 1:52 PM

I've used the same accountant for my income taxes for years. This year, they changed their pricing from a one time annual fee for income tax prep, to a monthly fee and increasing the total amount charged. What are my options?

They are starting the monthly fee in June, so I would have to pay 10 months at $40/month for next tax prep. That works out about $50 more than last year ($350 to $400). Obviously going forward, I would be paying $480 for their basic service ("Taxation services - 1040 Individual Income Tax Return") but if I wanted to actually meet with my accountant and get advice I would have to pay $75 a month for their tier 2 service: "Taxation services - 1040 Individual Income Tax Return
Taxation Services- Respond to first IRS notice
Taxation services - Tax Planning & Advice"

I would have a single meeting every year with the accountant to go over things but I appreciated that.

I am self-employed and get income from various freelance gigs. I am also getting married this year and may buy a new car and house (I know it's an awful time for that but I can't put my life on hold)

My questions are:

1. Is this a reasonable price level? I've been fine with their service so far but I know one person who used them and still got audited once. They're not perfect.

2. What are my options? Should I just do it myself?

3. If I need specific tax advice/consultation, what's the best way to find someone who can advise me without charging me an arm and a leg?

posted by clockworkjoe to Law & Government (11 answers total)

A customer being audited is not, by itself, a sign of a bad preparer, unless there was a specific mistake you are aware of. You don't need an accountant to buy a car or house - so what else are they doing for you for this monthly amount that they weren't doing before? Tax prep, even for a self employed person, should only be a one time fee. The fees for accounting and tax prep are also deductible as expenses for your business.

I don't have advice on finding someone new, but I do think you should look around and ask other people who may have more complex tax situations. I think a one time fee for extra advice during the year is reasonable, but not $75 per month, when you may only need one extra meeting.
posted by soelo at 2:57 PM on June 19, 2021 [1 favorite]

It's not a terrible price, my accountant in Oakland charged $550. But this year I went with a different guy who charged $350 and had my taxes done in 3 days. The meeting was included in that price. I would not agree to pay a monthly fee or an upcharge for advice unless I had a seriously complex tax return and the accountant was doing additional bookkeeping for me.

You can probably do it yourself. 1099 taxes arent hard, unless you have a ton of itemized deductions and even then it's just time consuming. Buying house or car doesnt get reported on your taxes, unless you pay for mortgage points which are deductible. Selling a house or car, yes. But not buying. Turbo Tax is used friendly if you want something between figuring it out totally on your own and paying someone.

Just go on Yelp or ask around. CPAs arent hard to come by, and most of them are competent enough to handle basic tax situations like yours or they'd quickly lose their license.
posted by ananci at 3:05 PM on June 19, 2021

Neither of those tiers seem excessive to me. I've been self-employed for 30+ years and my taxes have always been complex and costly to deal with. I think even in the early 90's I paid more than that for my tax preparer in San Francsico.
posted by asavage at 3:15 PM on June 19, 2021

If their standard fee was stable for a few years that was going to go up at some point. And it seems they are trying to smooth out their cash flow and reduce the risk that people won’t pay. And they are removing the need to argue with every client who doesn’t feel their one or two extra questions should give rise to any fees at all, let alone what the time is actually worth. Do the reasons matter to you? Probably not. Does it mean you have to find a new accountant? Not necessarily. But you‘re clearly not enthusiastic about the changes so there is no harm in looking. You’ll either find the rates are competitive and hopefully that will make you feel better about paying them. Or you’ll find somebody whose business model is more to your liking.
posted by koahiatamadl at 3:18 PM on June 19, 2021 [4 favorites]

One suggestion is to ask your accountant if they'd be amenable to waiving or discounting the monthly consult fee for a single annual meeting.

Personally I find their pricing structure somewhat unusual for the service provided -- it feels like they are trying to "soften" the blow of increasing their rates and/or guarantee a more regular flow of income by spreading it out -- but the pricing itself I can't speak to since we self-prepare.
posted by sm1tten at 3:20 PM on June 19, 2021

I would look at what you’d be paying overall, annually, for the service you need and see if that’s something you’re willing to pay. The overall price you mention seems on the low end to me, but I may be in a different metropolitan area. Also, agree that an audit isn’t necessarily indicative of poor accounting services.
posted by JenMarie at 3:27 PM on June 19, 2021

Response by poster: I'm in Missouri - things are cheaper here than on the coasts.
posted by clockworkjoe at 3:29 PM on June 19, 2021 [1 favorite]

My best advice is spend a little time asking, if you did get a new accountant, who would you hire?
Pick three that seem reasonable and reach out and ask - how much do you charge for a 1040 including (list the extra forms like your schedule C)? If i wanted to come for a just consultation, how much would that cost?

Three quotes plus the fee for your current accountant will give you a very good idea of what the local pricing looks like.

When you'll know if there is someone who is willing to work with you on a per hour basis just answer questions. Be aware that there is a big difference between asking general questions - like how does buying a house impact my taxes (in general) vs what should my estimated tax payments be for 2021. But when I went into business for myself the first time, I found it helpful to have a general consultation on what was changing (I just paid for an hour of the guy's time) then I did my own taxes for many years after that.
posted by metahawk at 4:01 PM on June 19, 2021

I think it matters how complex your return is. My accountant costs much more, but she’s filing for two businesses and does multiple state returns for one of them. If your income isn’t complicated, if your deductions aren’t complicated, if your work is mostly in-state, if you don’t have a bunch of different retirement accounts you’re trying to maximize, then I think you could probably find someone cheaper.
posted by bq at 5:59 PM on June 19, 2021

I don't think that this amount is necessarily excessive for a tax return for a freelancer, but what are they doing between July and April for you? What guarantee do you have that after 8 months they won't drop you, or charge extra, or any other scammy thing that puts you out 8 months of paying them for nothing and still needing to find a new accountant.
posted by jeather at 7:45 PM on June 19, 2021 [1 favorite]

Should I just do it myself?

Lots of people on this Bogleheads post would say yeah. As a fellow self-employed person, I’m one of them. I understood taxes and deductions SO much better after I started doing them myself, and the many available software packages make it very doable.
posted by daisyace at 7:08 PM on June 21, 2021 [1 favorite]