This questions, comes up a lot. I think the advent of do it yourself tax software has created a mindset that tax preparation is a commodity. The truth is a fair price totally depends on the complexity of the tax work and level of services that you need. There are a number of very narrow niche areas of tax practice in the US, where advice can be very expensive. Conversely there are firms that churn out volumes of tax returns for really low rates. You should try to identify what your tax needs and expectations are before you go shopping for a tax adviser.
Now for a perspective, I can tell you that for a fairly standard general tax plan for an individual or small business I usually charge $200 to $400. A fairly typical individual tax return will run about $300 and a fairly typical business return will run about $350. Those fees might increase depending on the complexity of your return, how organized your records are or if you have specific issues that need to be addressed in your tax plan, so there are any number of factors that could increase your total cost, but that at least gives you an idea of costs involved.
One comment here is that just about every new client that comes to me, says “I think I have a fairly simple return”, so I will let you know upfront, when you say that I am not going to believe you. I don’t mind explaining why your return is not that simple, but if your tax issues were simple, you probably should be using Turbo Tax instead of seeking my advice anyway.
One thought on do it yourself tax software if you own a business, in my experience entrepreneurs either have a skill that they can sell or they are just great salespeople. Rarely are they great bookkeepers and rarely is accounting and tax work the area where the owner adds value to the business. I think every business owner should consider how much better the business could be if he or she took the time they spend preparing tax returns and doing bookkeeping,often doing it incorrectly, and instead spent that time working on the area of the business where their skills are valuable, such as landing a new customer or designing a new product. I believe most business owners, if they place a value on their own skills and what those skills mean to the business, will find it easy to justify paying a professional to help with their taxes.
There are other things to consider in figuring your cost. In my firm’s case, I don’t charge clients if they have questions during the year, because my philosophy is that you use a CPA to help you get things done right from a tax and accounting perspective, so it seems counter intuitive to me to put up a financial barrier between you and the advice you may need, so I don’t charge clients if they need to email me with questions during the year. I tell you that to illustrate that you may find other tax professionals who charge less to prepare a tax return, but then they might bill for their time when you call with a question, so it can be really difficult to compare side by side cost for tax advisers because our industry can have a multitude of billing practices, and you need to understand if you are going to be charged by the hour, by the form or by a flat fee. Also you need to understand what additional things you might be expected to pay for. You don’t pay a CPA to fill in the blanks in a tax form for you. You pay for the expertise and knowledge.
We started out talking about cost, but I feel compelled to add that as boring as we may seem, tax advisers are not homogeneous, so you need to consider intangibles in a tax adviser relationship that may be important to you. To use myself as an example again, I operate pretty much virtually. If you are in China (yes I have clients in China) and are comfortable working with your adviser remotely, then I can probably help. If you are the type of person that needs a lot of face to face time, then I am probably not a good fit for you, so I suggest you take some time to understand those type of issues and don’t focus solely on cost, because the most competent tax adviser in the world will do you no good if you are not comfortable working with and sharing information with them.
Now one final thought on competence, look for credentials. You want to use someone who is a tax attorney, CPA (Certified Public Accountant) or EA (Enrolled Agent). All three of those groups have independent competency, licensing, educational and ethical standards that their members have to meet. Despite recent efforts by the IRS which were challenged and struck down by the courts, there is virtually no regulation of who can call themselves a professional tax preparer and there are tax shops where anyone who walks in the door can take a class for a couple of hours and call themselves a tax adviser.
In summary, professional tax help is not a commodity and you need to be an informed consumer when you decide the best way to comply with your tax reporting requirements.