And Here We are... Tax Season

Jan 15th 2018
Founder/CEO CWSEAPA PLLC
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Every first week of January, I go through the office singing, set to the Christmas song, It’s the Most Wonderful Time of the Year. The lyrics are:

     It’s the most wonderful time of the year
     There’ll be money a flowing
     Clients a calling
     And daddy will stand up and cheer
     It’s the most wonderful time of the year

We are honestly very blessed. We have taken a cyclical business, and learned to make money all year. However, tax season is a time when we make about 40 percent to 50 percent of our income for the year. It’s a major influx of cash, and after all of these years, we finally have it down.

Around March we prepay our rent for the year. Our landlord loves us. I pay myself and my wife large sums of money that we use to max our retirement plans, we fund our Health Reimbursement Account, prepay our monthly health insurance, and any other monthly bill that we are under contract to pay.

Then in April, as an insurance policy, we open a CD with our bank that has a six-month term, and put about $20,000 in it, which really comes in handy in November and December, when income tanks. We use tax season as a time to sell clients on other services: estate planning, monthly accounting, tax planning, etc. Those are all of the good things about tax season.

The bad things about tax season are that, for whatever reason, everyone wants to meet with you. So your days are filled with appointments, causing you to work early in the morning, or late at night, to get work done. What I have done, is set only certain days when I take appointments, and leave myself two free days a week to work.

However, the deeper into tax season it gets, those days are filled with calls, emails, and anything that isn’t work. Around mid-March I begin sleeping in shifts. I will work for 12 hours, followed by sleep for three hours, and then wake up and repeat the cycle: work 12 hours, sleep three hours. That will take a toll on you, and you will lose your sunny disposition. In January, I apologize to my wife, kids, and employees in advance, because I know that I will be tired and take things out on them.

Then everyone wants “5 minutes” of your time. In 24 years, I have learned that 5 minutes really means at least a half an hour, or an hour. That’s not so bad, until it repeats itself 1,000 times in four months. There are 24 hours in a day, and it seems like I am on my 25th hour every single day.

My personal favorite is the client who comes in with a stack of unopened IRS Notices. We’re open all year, and when these notices came, we would have had ample time to respond to them. But now, these people are at the point of no return and can’t understand why I am charging a huge fee to handle the issue for them.

I have a tendency to want to help people, and a few years back, I decided that I had to bill for it. You need a letter answered? I’m going to charge you. You need a comfort letter to your lender? I need to charge for it. Especially during a time of the year when I am making half of my income. I can’t do ANYTHING for free.

There is always one day late in the season when I am tired and just ready for it to be over with, which I call “The Day of the Crazies.” This is the day where I hear from the guy I spoke to in August about filing four years of returns, and handling the representation, or the client that I’ve been hounding for all year for information. Even former clients, who want me to waste my time digging up some documents that we no longer have.

It goes on all day and ends around 3 p.m. with me in the bar downstairs downing double scotches and sodas. I don’t tell anyone in the office where I am going, and I take no device with me, so that I can’t be contacted. The day culminates around 5 p.m., when I stagger away from the bar, and find my way back to the office, where my worried wife is waiting for me.

I’m sure that every tax accountant has their fair share of tax returns that they do for free. These can be for friends, family — you name it. What I don’t understand is why these people wait until the last minute, their records are a mess, and they have completely unreasonable timeframes for the work to be done.

At least one or two of these freebie people, I have to put in their place. They are expecting $1,000 in services for free, and they think that they don’t have to follow the rules like everyone else. It’s a nightmare. What’s worse is my wife is Cuban, and after 22 years, I am still meeting cousins for the first time. Before my wife worked with me, she would expect these returns done for free, now she limits it to three or four, which I can deal with.

In closing, I would like to give you some advice. Don’t do anything for free for a client. Charge for everything. At best you won’t have to do the trivial nonsense, and honestly, no one should think that a professional should do something for free, unless the professional caused the problem. If someone needs something by Friday, and they just gave it to you late Wednesday, charge double. The fear is that you will lose the client, but do you honestly want a client who comes to you at your busiest time expecting something for free?

Get rid of price shoppers. My fees are about three times those of my competitors. Why? Because I have a license, a master’s in taxation, 24 years of experience, and I know my stuff. I don’t want some person thinking that they are comparing an apple to an apple when they aren’t.

The later it gets in tax season, the more felicitous I get. If I get a phone call from a new client, and they even mention what I charge I always say, about $10,000, in a serious voice. I charge by the form for the tax return, and time for anything that I have to compile (NOTE: CPAs, DON’T FREAK OUT. I KNOW I CAN’T DO A COMPILATION), I charge an hourly rate. The question of fees is ambiguous, and the client doesn’t realize it.

Remember, you made the conscious choice to get into this business, and tax season is part of it.

Replies (3)

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By apeet310
Jan 16th 2018 17:21

Great article! Although I must admit, you nearly lost me during your first few paragraphs describing the joys of tax season. Haha.

This will be my 11th tax season, and 8th as a CPA. I often find myself doing things for free for "friends and family," and undercharging for services that I really shouldn't be. My goal this year is to cut that out... so I really appreciate your timely advice. Thank you!

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Replying to apeet310:
Craig Smalley
By Craig W. Smalley, EA
Jan 16th 2018 22:04

Think of it like this. Your time is a commodity that this person is willing to pay $x.xx for, during a time of the year when everyone wants your time. In July, you can chit chat, do things for free, etc. You could do this thing for free, or you can do this thing for $1000. Who gets your time?

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By jferguson
Jan 16th 2018 22:52

Hilarious!! And oh, so true!

A sense of humor is essential to get through a tax season.

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