“Our books are a mess. I feel like our prior year tax return is wrong and we need help. We tried someone else to help us, but they just did not seem to care about our business; all they wanted to do was get paid.”
How many times have you heard a prospect tell you this? While many small business owners have a heart for service and started their business to do what they love, tax and accounting is uncomfortable for them. What’s engrained in their head is that hiring an accountant is an unreimbursed expense, so the default question from them is usually, “How much is this going to cost me?”
Most tax practitioners have a difficult time answering this question. We don’t want to quote too low and work for free, or quote too high and do a disservice to the client, so we go to an hourly rate. The problem with an hourly rate is that the client is now afraid to contact us, and we turn into something that costs them money every minute they are on the phone with us. How do we, as professionals, navigate these waters?
Nine months ago, in June 2020, I had a client come to me with the very same scenario. The business had spent tens of thousands of dollars on their previous CPA, only to be left with tax returns they did not understand, book numbers that did not tie to the tax returns, and questions about what in the world they just paid for. It turned out they only paid for tax returns. They expect no IRS letters, so if one comes in the mail – because we know it will – the owner will go looking for another CPA to help them with their taxes.
This causes a vicious cycle, where each year a new CPA is only working from a tax return that a different accountant previously prepared when, in fact, the scope of work needs to be broader to get the job done right. When this owner came to me, the conversation started off right away with, “I need my tax return completed. How much is this going to cost me?” Knowing that this is the client’s default approach because of his relationship with his previous accountants, I answered with the honest truth – and one he probably had never heard: “I have no idea,” followed up with, “But, I don’t want to concentrate on the cost right now. What we need to focus on is getting the books accurate, match prior year tax returns, and get a game plan in place so we can ensure this situation never happens to you again. Instead of worrying about your books, you can concentrate on running your business.”