[Tncincy]

I’ve run my own Bookkeeping and Tax Business for 18 years or more, business was slow the last few years due to the end of ral (refund loans) and filing season starting so late. My competitors have continued to offer such products to say the least. Well, this year, the bank I use that offer refund transfer products is now offering the opportunity for me to offer my tax clients refund advances, also various other loan types. I am considering opting in, but I am also wondering if I want to be bothered with the whole loan, refund loan business. I like the quality of clients and returning clients, I have at this point, and I’m just not sure….on the other hand, these services provide a good extra revenue with tax services. I lost a lot of clients to the do it yourself online as well. Need the money, don’t want foolishness.

When I pass this exam, I plan to convert my business to a CPA practice. None of the CPA’s in the area offer such loan programs, so I really don’t want to come off as some quick cash hustle and lose professional respect.

So what do you think? Pros and Cons……

It begins with a 75
Been here too long as a cheerleader.....time to pass

It begins with a 75
Been here too long as a cheerleader....ready to pass

[Tncincy]

nobody?

It begins with a 75
Been here too long as a cheerleader.....time to pass

It begins with a 75
Been here too long as a cheerleader....ready to pass

[confusedcandidate]

Refund advances? I would never do that, terrible idea.

Weekends are meaningless to a CPA candidate

[Anonymous]

Interesting that you post this. I just had a conversation with a friend about this yesterday.
I am in the process of starting my own Tax Business and was speaking to her about prices and services offered. (I work FT and only doing it on the side until after I obtain my CPA license. I may expand if my business grows). She mentioned that she goes to some random business because they also issue on the spot refunds. She said she never knows what her true refund should be, because they charge her a contingency fee (based on a % of her refund…She thinks she paid them about $800 last year), cut the check right then for her to cash, and they collect her actual refund. When I heard this I was FLOORED!!! (There are so many reasons why I was floored but I won't get into those) But I simply told her, I wouldn't do that.

People like that shop around and go to whoever will give them the largest refund, by whatever means necessary and don't think about if they'll get audited. I don't have time for that headache. This is a side business to bring in additional income to help pay off student loans quicker. I don't have the time to do your tax return, only for you to go to someone else because they can get you $200 more on a refund. While it is a very lucrative way of bringing in extra money, I don't feel like I could build an actual practice (leave my job and this be my sole source of income) by dealing with people like that. I'd rather be conservative, and have my business grow because I have respectable clients, who refer me to their friends and family, than dealing with people looking to make a quick buck by trying to scam the government.

[Anonymous]

Interesting that you post this. I just had a conversation with a friend about this yesterday.
I am in the process of starting my own Tax Business and was speaking to her about prices and services offered. (I work FT and only doing it on the side until after I obtain my CPA license. I may expand if my business grows). She mentioned that she goes to some random business because they also issue on the spot refunds. She said she never knows what her true refund should be, because they charge her a contingency fee (based on a % of her refund…She thinks she paid them about $800 last year), cut the check right then for her to cash, and they collect her actual refund. When I heard this I was FLOORED!!! (There are so many reasons why I was floored but I won't get into those) But I simply told her, I wouldn't do that.

People like that shop around and go to whoever will give them the largest refund, by whatever means necessary and don't think about if they'll get audited. I don't have time for that headache. This is a side business to bring in additional income to help pay off student loans quicker. I don't have the time to do your tax return, only for you to go to someone else because they can get you $200 more on a refund. While it is a very lucrative way of bringing in extra money, I don't feel like I could build an actual practice (leave my job and this be my sole source of income) by dealing with people like that. I'd rather be conservative, and have my business grow because I have respectable clients, who refer me to their friends and family, than dealing with people looking to make a quick buck by trying to scam the government.

[Anonymous]

contingency fees are illegal (like seriously illegal,) while refund advance loans are all sorts of sketchy.

don't even go there. think about the kind of clientele you will be attracting with services like these? if they cant even afford to wait 3 weeks for a refund how can they afford to pay you for the tax prep fees? these types of returns are generally bottom of the barrel, earned income credit nightmares. not worth getting in trouble for.

know your value! i charge a $299 minimum retainer up front to weed out the riff raff and let the rest go to jackson hewitt or do their own on turbotax.

[Anonymous]

That's exactly what I told her (Contingency Fees are illegal). However, I looked it up this morning, to double check, and I saw that it only applies to “practices”. The ruling stated that Ryan, LLC doesn't fall under the umbrella of “accounting practice” (I think) do they were free to charge contingency fees for tax returns. I'll find the link and post it. Either way tho, I completely agree with you.
Also, do you work FT and do taxes in the side or is this your FT job? I'm asking because $299 retainer seems high for a 1040. Or maybe I'm just undervaluing myself.

[confusedcandidate]

Wannabecpa: my firm's absolute minimum is $500 for any engagement. We don't take walk-ins. Our clients are all wealthy professionals and business owners for the most part, with complex tax situations. FWIW, we tell plenty of people to go to H&R block if we feel like we are too expensive to be valuable to them, or if they are too small to be valuable to us. I don't know what your clients are like, but you might indeed be undervaluing yourself. Take a look at your clients, your market, your competition, etc and consider if you should make some changes to your billing practices.

Weekends are meaningless to a CPA candidate

[Anonymous]

Confused – I'm just now starting. I work FT I'm industry and I'm starting to do taxes on the side. Once I obtain my CPA license, I MAY look into expanding & making it my FT gig.

[Anonymous]

the $299 is my thing on the side-but i stay away from basic 1040 returns it would be immoral for me to charge somebody $300 just to bang one W-2 in! my firm (local/not-big4 or anything like that) also has a minimum though, identical to what confusedcandidate said down to the send em packing to HR BLock stuff. (wondering if we work at the same place :)?) this is just supplementary income, i did maybe 10 returns tops last year

your situation is different @WannaBeCPATX16

since you are just starting out, as you build your clientele by referrals/word of mouth/(slight local advertising?) I assume you are doing simpler 1040 returns,cuz a guy with a couple of rentals, K-1 interests, and a side business probably has his own accountant already I doubt he will go looking for you (that is until your buddy recommends you to him for the great work you do!) i assume in your situation depending on the market(texas?) it should be $100 minimum (double at least what they can do with their own $50 turbotax). if its an easy non-itemizing return couple w-2
s and 1099-int's that takes you 30 minutes to bang into the software i assume $100 bucks is reasonable. in that case you are not undervaluing yourself. also your rate depends on if you have just a PTIN or you got a CPA. CPA commands way more obviously. i hope if that makes sense still kind of early for me

[Anonymous]

Thank you. That's actually around what I charge. But once I obtain my license, I will definitely increase my prices. Thanks. … Did not mean to hijack your post @tncincy

[Tncincy]

@WannaBeCpatx16, It's ok ….I get it . don't worry about refund products, just stick to business as usual. I charge 95 for a simple 1040 then go from there. H&R and the others have all kinds of gimmicks, like scratch off tickets and give a ways. I really don't have time for that, I just want to stick with taxes.

It begins with a 75
Been here too long as a cheerleader.....time to pass

It begins with a 75
Been here too long as a cheerleader....ready to pass

[ruggercpa2b]

I think it's a little unfair to say you will attract shady clients by offering refund loans. When I was in college a lot of us would go to places that did refund loans because we needed the money right away. They did nothing sketchy on our returns however the fees were high for getting your check that day. That was also back when the IRS didn't have direct deposit and you had to mail in everything or efile and wait a few weeks for your check. Now I just do the taxes myself online and don't really care when I get the refund because I am not living paycheck to paycheck. Also, in the fees for the refund check you paid your prep fees so those people will not run off with your money for preparing the taxes.

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I am so ready for this nightmare to be over. Been at this way too long.

[Tncincy]

Did anyone have any suggestions of marketing a tax business without doing the look like get money quick gimmicks. Again, trying to keep it clean, don't want to attract shady clients, or become liable for bad returns. It's a good business, but has been really slow the last few years.

It begins with a 75
Been here too long as a cheerleader.....time to pass

It begins with a 75
Been here too long as a cheerleader....ready to pass

[Tuthegreat]

i never knew how those loan/refund advances work. But I will say this, from my experience, they would be so troublesome. I guess it would work for those clients with simpler 1040. Perhaps some elements of Sch A, B/D, C, and E (rental). What about those fatter fishes with K-1s, and those that make quarterly estimates. Are you going to give them a refund/advance on their over payments?

What happens when their tax return says they have a 6,000 refund. So you give them a 6,000 advance?? Two weeks later, the IRS issues a CP notice saying they made an adjustment to the return based on inaccurate tax estimate payments. Now, your tax prep business just turned into a collections business. Good luck trying to get that advance back. This just attracts shady clients.

[Anonymous]

Since you will be getting your license I would look into specializing in an industry. Niche accounting/financial consulting is the direction of public account IMO. Days of the profitable 1040s are dying.

[Author]

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