For New Clients…

This is an open letter to all the potential clients that express interest to hire me or my firm for accounting and related work.

I get several emails a week with start with: “I think I need to hire a CPA”; usually followed with a quick backstory of the person’s business they own or manage, and then finished with “Can you call me to discuss your rates?”

So, I have been thinking about what is the best way to answer this, because actually calling a random person that thinks they might or might not need an accountant could also be either a huge waste of time (for both parties) and/or end up quite frankly giving some free advice to a person that is just not ready to really hire an accountant for their business. That being said, I usually like to followup with first explaining all the possible things an accountant can do (and this list is not complete, it’s just limited to the work I do):

  • Answer you basic business, accounting, and tax related questions via phone or email
  • Train and advice you on how to do your own bookkeeping and/or use your accounting software
  • Integrate your accounting system with other business applications or business workflows
  • Clean-up/Organize the bookkeeping you have already prepared (or attempted to anyway). Or close your books (prepare completed financial statements) at the end of the month, quarter, or year. Sometimes referred to as “outsourced bookkeeping service”
  • Prepare your monthly or quarterly sales tax returns
  • Help you setup and prepare your payroll checks with withholdings
  • Prepare your quarterly or annual payroll tax returns (including W-2s and 1099’s at the end of the year)
  • Prepare your annual individual and/or corporate tax return
  • Perform quarterly estimates for income tax and discuss decisions that impact tax liability, AKA “Tax Planning”
  • Structure or Restructure corporate entity for ease of compliance and/or best tax treatment
  • Help small business owners prepare documents for loan applications
  • Revise your previous 2 years of tax returns to see if there are any obvious missed opportunities worth doing an amendment for
  • Provide business/management advice beyond the numbers and taxes

Once it is clear “what” is it that an accountant can do, then it’s important to identify if that particular accountant is the right fit for your business. Some accountants specialize in specific industries and company sizes, while others are generalists and take any client of any size or any industry. Usually the price and/or their capacity to provide deeply relevant advice to their customer will vary based on their areas of focus.

I personally don’t believe in giving a “hourly rate” willy nilly and letting the customer decide if the rate makes sense without discussing what are the actual services needed. Unfortunately, a RATE is usually based on how long the work will take; and generally the actual amount the work takes, what the accountant estimated the work would take, and what the customer things the effort is… are usually at odds. But more importantly, the value of the OUTCOME from the work produces will vary greatly from client to client or project to project; and it is for this very reason that I prefer to give a fixed price the job based on those specify outcomes that we can guarantee for the client. This outcome-based fixed pricing methodology id ideal for moving the conversation about “effort” and “rate” but now more focused on what the client expects to get in return. But the number 1 challenge I have, is that for this to happen, I need to have an in-depth diagnosis with the new potential client to be able to make a formal offer! Since our firm charges between $275 and $375 to do this type of diagnosis, many prospects want to to HOW MUCH will the whole thing thing be (or at least) ballpark even before paying for a diagnostic.

So this “I need a new accountant, how much are your rates?” question is hard to answer with nuance. So, for this very reason, our firm is comfortable stating the diagnostics fee, followed by prefer to give a ball park based on other businesses we work for of typical price ranges (safely on the top end of the range) to encourage the potential client to be very intentional about figuring out exactly what are the services need, so we (accountants) can be more precise in giving them a PRICE (based on specific services needed that will in turn be based on the OUTCOMES from those services); and not a RATE (based on however long the work might take). For example:

“Mr. Potential Client, the average company with $1mm in annual revenues and around 10 employees, that requires all or most of the services named above, pays our firm $2,500 to $4,000 a month for a fixed engagement all inclusive of the services we can provide; and pay even more when they ask for a guaranteed outcome in return”

This is why the company size, number of unique type of transactions, number of employees, industry, ownership/investor structure, complexity of business/transactions, growth rate, client expectations, and undertaken risk by becoming someone’s “accountant” all play a role in pricing our services; specially when the outcomes are well defined and/or explicitly guaranteed as part of the service. And since, this would obviously require a deep conversation. For this I like to charge a diagnoses fee of $375. This fee will include revising the circumstances that the potential client currently might have, what relevant work they have done internally, what collaboration might look tike if we move forward, and giving some general advice of how to move forward in the absence for having to hire us as your new accountant… If it is a good fit, our firm will issue a proposal with options on how we could work, and of course, the diagnostic fee is applicable to the project.

I hope this information is relevant to you. And if you want me and/or my firm for $375 to determine if it makes sense for us to be come your new accountant. Here is my e-mail:

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