No More Free Tax Consultations

My client acquisition cost is through the roof. It’s not actual money that I am spending, it is my time. When I meet with a new client, I ask for the last three years tax returns, both business and personal, before we meet, so that I can review them. I then offer a free hour consultation.

After the consultation, I send them an analysis of the returns they sent me, what I can save them, and how much it will cost. I then send to the client, and have a follow up call with them to explain what I sent them. The whole process is about five hours, or $1,375 worth of free services.

If the client can’t see, and I showed them in black and white, that my fee is a small fraction of what they will save, then that is on them. If the client sends an email talking about a tax strategy for the current and following years, that email is met with an engagement letter, asking for a retainer, that will be billed at my hourly rate. Once the retainer is depleted to a certain amount then it is replenished.

My time is better spent billing my hourly rate, than it is answering complex questions, in the hopes that I will get the tax return. This engagement letter does one of two things. The client goes away, or they sign it. The results are about 60% sign it, and 40% I never hear from again.

Here is where accountants make a mistake. You either sold yourself at the free consultation, and in my case with the analysis, tax plan and proposal. If you didn’t, then why waste your time on a client that you are never going to convert, and spend your time on those clients that respect you.

I get over 300 emails a day and countless phone calls. If I am not billing for that, then I am spending my time doing a bunch of non-billable work, that will either upset me, or cause us not to have revenue. Not to mention that when you are giving free advice, clients write you off. When they are paying a good fee for it, they respect you.

There are very few times I have to deal with price shoppers. When I do, I cut the meeting short, and tell them that they just aren’t a good fit for our firm. What these shoppers don’t understand is that they are working with the most honest accountant in the business. For instance, if my fee is more than what the client is saving in taxes, I will be the first one to tell them to stop. I have taken more food off my table with my honesty, but something about that captivates the client. The next time they have a complex situation, they will call me first, because I was honest with them.

The National Society of Accountants every year, releases the average cost of a tax return. My fees are double and sometimes triple those fees. What those averages don’t take into account is education, and experience. I have been practicing since 1994, I eat, live, and breathe taxes. I have Masters Certificate in Taxation. I have been blessed in my career that I have been exposed to most business. I know the special tax implications that affect their industry, and if I can’t remember, I will certainly brush up on it.

When I drastically raised fees five years ago, my family ate a lot of peanut butter and jelly, and I lost 60% of my clientbase. Today, I’m not only sought out, I am paid for my advice, and that advice has saved a lot of money to my clients. I’m not going to lie to you, it was hard, but when we emerged from the other side, it got so much better.

I want to point out that I am not pompous. I am the most humble person you will ever meet. I study tax law for two hours every morning, I take a lot more CPE classes then I have to. I want to know things inside and out. I would do this for free if I could.

I suppose the point that I am making is that we all have different levels of knowledge. I will not compromise my fee, only in an extreme circumstance. I‘ve almost been in foreclosure, we barely ate, but I refuse to compromise myself, and do something just for money.

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Craig W. Smalley, MST, EA, is the Founder and CEO of CWSEAPA, PLLC. He has been admitted to practice before the Internal Revenue Service as an Enrolled Agent and has a Master’s Certificate in Taxation from UCLA. In practice since 1994, Craig is well-versed in U.S Tax Law and U.S. Tax Court cases, and specializes in individual, partnership, and corporate taxation for high-net-worth clients; entity structuring and restructuring; and representation before the IRS regarding negotiations, audits and appeals. Craig is currently a columnist for CPA Practice Advisor and AccountingWEB and has had 12 books published. His articles have been featured in publications including the Wall Street Journal, The New York Times, and Christian Science Monitor, and he has been interviewed and appeared as a featured guest on numerous radio shows and podcasts. Craig can be reached at craig@craigwsmalleyea.com.