Author Topic: Any Enrolled Agents/ tax preparers want to chat? (USA)  (Read 2125 times)

mozar

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Any Enrolled Agents/ tax preparers want to chat? (USA)
« on: March 23, 2018, 05:30:08 PM »
Hello,
I am interested in taking the EA exam and becoming a tax preparer. I have the following questions if you don't mind.

1. Where did you find clients when you first started?
2. Did you take over someone else's tax practice /buy someone's book? If so how much did it cost?
3. Do you do audit representation? Is it worth offering/ required?
4. How many clients do you have in a year?
5. What do you charge for each return and what geographic region do you live in? (I live in the mid atlantic)
6. Anything else I should be asking?

My experience: I went to grad school for accounting and I took a few tax classes and I did well. I also volunteered as a tax preparer for low income people for a season.
Thanks,
mozar

Capt j-rod

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Re: Any Enrolled Agents/ tax preparers want to chat? (USA)
« Reply #1 on: March 23, 2018, 05:56:50 PM »
I have my taxes done by a CPA... This year I learned that his partner is an EA and has been doing the returns for years working with him. She is younger and much more computer savvy, where as he is late 50's been there done that. Between the two of them they are excellent! She is inline to take the reigns as he fades out. He now only works 3 months a year and she does the rest.

Cpa Cat

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Re: Any Enrolled Agents/ tax preparers want to chat? (USA)
« Reply #2 on: March 23, 2018, 06:47:55 PM »

1. Where did you find clients when you first started?

When I first became self employed, I worked an at-home phone job for TurboTax (open to EAs or CPAs) during tax season. Hardly anyone actually met their experience requirement.  I'd encourage you to apply once you become an EA, even if you read the job description and think you won't make it.  I swear to God, their recruiters are paid for every warm body they get to pick up the phone. While I had tax experience at a normal accounting firm, that TT phone job was the best education I could have gotten in answering questions clearly, managing customer expectations, and understanding real peoples' issues with taxes.

I also joined a referral based business networking group (BNI), and a large chunk of my business comes from referrals from that group.

Finally, I built a reputation on Elance (now Upwork), by bidding jobs and requesting reviews after successful projects. Only 5 star reviews are worth it. You have to start low before you've built the reputation, but after you have some successful job completions, people will pay more based on your history. Also, some clients will become repeat clients.

2. Did you take over someone else's tax practice /buy someone's book? If so how much did it cost?

No, I started from scratch. I believe the rule of thumb is 1x gross. I wouldn't go there, though. If you do, you'll lose at least 25% of the clients who just don't like being sold or prefer the old accountant. You'll lose more if you lack experience in managing a full time client load on your own. Let it grow organically.

No advertising was ever worth it, except that one of my first clients built me a professional website and it continues to be my #1 source of clients, despite the fact that we basically spend nothing on it. He just happened to be really good at understanding search algorithms. When I tried building my own website, you couldn't even find me.

3. Do you do audit representation? Is it worth offering/ required?

It doesn't come up often. But yes. Current clients will be nervous if you say you won't defend them in an audit. Also, audit rep is easy if documentation is good, so on my own clients, it's no big deal. On clients who are calling just for that - if you don't like it, or aren't confident in it, then don't feel required to accept them. Like I said, it doesn't come up often.

4. How many clients do you have in a year?

I think I did 200 last year.

5. What do you charge for each return and what geographic region do you live in? (I live in the mid atlantic)

Midwest. I'd rather not disclose. I raise my prices every single year and learned to set a minimum tax return price early. I also learned to quote my hourly rate and minimum cost with confidence and don't feel bad when people turn away. Price sensitive clients are some of the worst.

Start with finding out how much H&R Block charges for an Earned Income Tax Credit return, a return with a K-1, and per form Schedule C. You'll feel good about setting a reasonable price then and raise it as you become more popular. Don't feel the need to compete on price for casual W-2 returns. Basically, if people can do their tax return for free or $40 on TurboTax, they're not your target demographic. Accept them if they come along, because they're quick and easy, but don't compete on price.

6. Anything else I should be asking?

I use Drake Software, which is frequently voted the best software for new practioners. I highly recommend it. It has excellent customer service and a great knowledge base. Also the price is fantastic.

I also offer bookkeeping (I guide clients to Quickbooks Online). These days I have an assistant, because I charged a lot less for bookkeeping and now I focus on higher profit work. But when I was starting, monthly bookkeeping was a great source of income and clients.

I use Patriot for payroll as a wholesale accountant provider. They're full service payroll for super cheap. Way better than trying to do it yourself.

Feel free to reach out in PM if you decide to go this route and encounter problems that you're not sure how to resolve. When I started, I said yes to basically everything. Sales tax? Payroll? Audit support? Back taxes? Penalties? New bookkeeping software? Whatever. Fake it until you make it. I pretended I knew about all of that and I figured it all out.

One thing to keep in mind is that you can get form 2848 and pull IRS transcripts for clients from IRS E-services. You can also use 2848 to phone the Practioner Priority Service (less than 5 minute wait if you call in the morning, usually) and get penalties removed over the phone. Familiarize yourself with First Time Penalty relief, because it's easy and makes you a hero. My only regret is that I didn't start a ticker to log how many dollars I've successfully abated for clients - pretty sure I'm in the six figures. The first thing I'd do upon becoming an EA is file form 2848 on my own business to get myself into the IRS system with a CAF number, so that you don't have hiccups with that first client you need it for. Register for IRS E-services on day 1.

California is one of the worst states to deal with. Their Franchise Tax Board is a nightmare. They're the only state I consider rejecting out of state clients for.

mozar

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Re: Any Enrolled Agents/ tax preparers want to chat? (USA)
« Reply #3 on: March 23, 2018, 07:11:14 PM »
Wow, thanks Cpa Cat!

koshtra

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Re: Any Enrolled Agents/ tax preparers want to chat? (USA)
« Reply #4 on: March 23, 2018, 08:29:38 PM »
Yes, thanks!

carolina822

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Re: Any Enrolled Agents/ tax preparers want to chat? (USA)
« Reply #5 on: March 27, 2018, 08:32:47 PM »
Following.

I'm an EA working in a firm with another EA who owns the place (took over from the CPA who did maybe five minutes of actual work the entire time I'd been there) and several other tax accountants/bookkeepers. I like my job but see myself branching out on my own at some point. Not sure how the politics of that would work out, but it's very helpful to see Cpa Cat's strategies. We've got a particular niche that I really enjoy working with and it would be tough to bring any of that with me without poaching clients, but finding that niche has been really good for our firm - that's something I'd be looking to do even if it ended up being a different niche.

mozar

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Re: Any Enrolled Agents/ tax preparers want to chat? (USA)
« Reply #6 on: March 28, 2018, 01:20:18 PM »
What's your niche carolina822? I doubt there will be any more posts on this particular thread.

Cpa Cat

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Re: Any Enrolled Agents/ tax preparers want to chat? (USA)
« Reply #7 on: March 28, 2018, 08:59:03 PM »
I use Drake Software, which is frequently voted the best software for new practioners. I highly recommend it. It has excellent customer service and a great knowledge base. Also the price is fantastic.
Thank you so much for saying this. I swear I looked before and Drake was much more expensive but I just looked again and really it's not much more than what I'm paying for my (pretty crappy) software.

Bonus question: Does the EA certification really matter? So far all I do is relatively simple individual taxes. The most complicated returns I have are a pair of in-home daycares and one basement rental. I've actually passed the CPA exam but haven't met the experience requirement in my state and at this point I'm not too interested in getting the experience.

"Does it really matter?" is complicated.

Does it matter to you? Probably not. As you already know, you don't need to be licensed to prepare tax returns. Arguably, the continuing education requirement is probably a good thing.

Does it matter to your client? I think clients prefer a credential and will pay more for a preparer who has one. As with many credentials, it's a signal of the effort you're willing to expend. You didn't need to do it, but it's comforting to know that the tax preparer has willingly subjected themselves to some kind of testing and oversight. They won't know the nitty gritty details - just as they don't really know that three quarters of a CPA license has absolutely nothing to do with them. However, the letters do have weight. They have faith in my knowledge and experience and are probably more likely to take my advice seriously.

But I think you need to ask what kind of accountant you want to be - Do you want to be an advisor? Or do you just want to be a preparer? If you want to be an advisor, then I think a credential is important, because it influences your billable rate and your gravitas, as well as your general knowledge. If you want to just prepare the forms, then probably not so much, because your profits are going to come more from volume than spending extra time with each client.

And certainly, for someone who is new to tax preparation, they need to learn the ropes, and the EA license will get them the knowledge base they need to feel confident to get started.

---
On the topic of Drake - Drake doesn't promote it much, but Drake has a pretty active and helpful forum. If you go that route, definitely check it out and get registered. Also, once you sign up, their early renewal price is heavily discounted. You really only pay full price the first year.
---

On the topic of niches - Mine is small businesses and self-employed individuals. I do plenty of individuals without businesses, but they're not my bread and butter.

When I worked at a larger firm, my specialty was actually 990s (non profit tax returns). It was 90% of what I did. But when I went out on my own, I couldn't break into that sector easily. Nowadays, I turn down 990 clients because they don't want to pay. Small businesses are fun, and now I target them specifically. But I also do 20-odd returns a year for Foreign-Owned LLCs. Due to my original policy of saying yes to everything, I ended up with that weird sector. If I wanted to, I could easily create an entire business with only foreign clients - but it's not my favorite area. I only accept them by referral from a current client now and look for specific characteristics when considering them. The foreign tax rules get complicated and change annually, so I keep that area narrow so that I only have to be an expert on a specific set of circumstances and not Everything That is Foreign.
« Last Edit: March 28, 2018, 09:01:36 PM by Cpa Cat »

MountainTown

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Re: Any Enrolled Agents/ tax preparers want to chat? (USA)
« Reply #8 on: March 28, 2018, 11:19:46 PM »
One thing to keep in mind is that an advantage of the Enrolled Agent is the representational powers(you can be a Power of Attorney) before the IRS.  Given the expertise/training required for a CPA, these powers are actually a big deal for just an EA to have. In my opinion, it adds a lot of value to the EA. I say this so you keep in mind that if you want, it's not just preparation...you can also focus on representing before IRS Collection and Exam. For the most part other preparers cannot do this, or if they can it is only under limited situations in regard to a return they prepared.

I have no idea what people think of this type work. I don't know if it pays well or in high demand. I would be interested from hearing from those in the business...I would say that it's actually very different from prepare work and a totally different skillset(that you will be licensed for!)

jwright

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Re: Any Enrolled Agents/ tax preparers want to chat? (USA)
« Reply #9 on: March 29, 2018, 08:27:04 AM »
CPA working in industry with a tax prep side business here.  I was formerly in a Top 20 regional firm for years, but got a little burned out and came into industry where there's no busy season and no customer service aspect (at least not to hundreds of external clients).   

I prepare about 20-30 returns a year during tax season for individuals and small businesses; mostly friends, family, and former clients.  I am actually trying to whittle this volume down.  I charge $150 per hour, but at this point most of the returns I am doing are only an hour or two of time.  If I were to grow my business, I would try to move to a flat rate with a minimum charge so that I could financially profit from my efficiencies.   I would also only take on clients that you trust/seem reputable.  I am currently dealing with a "business" that rents land for hunting.  The client has given me a list of expenses but I know in my gut that this is probably 90% personal use property, and as its a family friend, it's uncomfortable to confront him on this.  I've also had loads of people that just give me a list of income and expenses with no verification which does not fly with me; I want to see a bank reconciliation at least, if not the full Quickbooks file.

In my area, there seems to be no shortage of demand for accountants in tax, and surprisingly bookkeeping (you could stay busy in the offseason).  The keys are pricing yourself correctly and attracting the right client base.

mozar

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Re: Any Enrolled Agents/ tax preparers want to chat? (USA)
« Reply #10 on: March 30, 2018, 10:10:47 AM »
What does "representing for collections and exam" mean? Is that for people who owe money?

That's really interesting about Foreign-Owned LLCs. I'm looking forward to learning more about it.

MountainTown

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Re: Any Enrolled Agents/ tax preparers want to chat? (USA)
« Reply #11 on: March 30, 2018, 02:11:22 PM »
Yes I should say representing before Collection and Examination. People who owe money or have unfixed returns have a right to a Power of Attorney Representative. Usually it's a CPA but enrolled agents qualify as well.

Cpa Cat

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Re: Any Enrolled Agents/ tax preparers want to chat? (USA)
« Reply #12 on: March 30, 2018, 02:31:58 PM »
That's a good point. I file Power of Attorneys (Form 2848) a lot. People often come to me with penalties or errors that are easy to fix, assuming I can represent them.

Here's what Form 2848 says:

Quote
Unenrolled Return PrepareróAuthority to practice before the IRS is limited. An unenrolled return preparer may represent, provided the preparer (1)
prepared and signed the return or claim for refund (or prepared if there is no signature space on the form); (2) was eligible to sign the return or
claim for refund; (3) has a valid PTIN; and (4) possesses the required Annual Filing Season Program Record of Completion(s). See Special Rules
and Requirements for Unenrolled Return Preparers in the instructions for additional information.

Personally, I would not want this kind of limitation on my ability to represent clients.


mozar

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Re: Any Enrolled Agents/ tax preparers want to chat? (USA)
« Reply #13 on: March 30, 2018, 05:16:35 PM »
Good to know.

Doubleh

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Re: Any Enrolled Agents/ tax preparers want to chat? (USA)
« Reply #14 on: March 31, 2018, 04:11:19 AM »
CPA Cat this is great insight, thanks for all the info. I wonder whether you - or any one else with experience - may have some thoughts on my situation?

Iím a UK qualified accountant living currently in London but will shortly be moving to a Spanish island with a fairly healthy expat population of all nationalities, including US. I have some exposure to US expat taxes through my US citizen wife, and while we have had a CPA prepare her expat returns Iíve put a fair bit of time into understanding the issues and planning opportunities in her situation, which would carry across to a lot of expats.

Once we make the move we will be semi-FI but one of my plans is to supplement our investment income with part time remote accounting work to reduce our exposure to sequence of returns. I will have some time that I could use to take a credential, either EA, or my institute has just signed an agreement with NASBA and AICPA that means I can get a CPA by passing just the REG exam. I do have practice experence from several years ago, but it was not tax related so Iíd need to do a fair bit of reading up even to practice with UK clients, and based on this going for US taxes seems like a better fit.

The difficulty Iím facing is that everything Iíve read says donít consider starting a tax prep business without working for someone else first, but Iím struggling to see a way I could get that experience. There seem to be a sizeable group of clients who are happy using tax preparers remotely, and even several firms advertising for remote preparers, but all of the firms Iíve come across seem to stipulate either US based or US citizen only.

Ideally I would find a practice local to our new home who would like some busy season support, but failing that I may be limited to getting a credential then starting out on my own back looking for clients locally and remotely and just taking things slowly so I can figure it all out as I go.

Iíd love your thoughts as to whether this is just a completely crazy idea, or indeed any other suggestions for ways I could get some experience under the wing of someone who knows what they are doing from a remote location? Iím not legally allowed to work in the USA without getting a green card; I have thought about spending some time in the US volunteering for VITA but the timing for that would be hard to fit around kidsí school schedules.

Cheers

Cpa Cat

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Re: Any Enrolled Agents/ tax preparers want to chat? (USA)
« Reply #15 on: March 31, 2018, 07:43:46 AM »
Once we make the move we will be semi-FI but one of my plans is to supplement our investment income with part time remote accounting work to reduce our exposure to sequence of returns. I will have some time that I could use to take a credential, either EA, or my institute has just signed an agreement with NASBA and AICPA that means I can get a CPA by passing just the REG exam. I do have practice experence from several years ago, but it was not tax related so Iíd need to do a fair bit of reading up even to practice with UK clients, and based on this going for US taxes seems like a better fit.

The difficulty Iím facing is that everything Iíve read says donít consider starting a tax prep business without working for someone else first, but Iím struggling to see a way I could get that experience. There seem to be a sizeable group of clients who are happy using tax preparers remotely, and even several firms advertising for remote preparers, but all of the firms Iíve come across seem to stipulate either US based or US citizen only.

Ideally I would find a practice local to our new home who would like some busy season support, but failing that I may be limited to getting a credential then starting out on my own back looking for clients locally and remotely and just taking things slowly so I can figure it all out as I go.

Iíd love your thoughts as to whether this is just a completely crazy idea, or indeed any other suggestions for ways I could get some experience under the wing of someone who knows what they are doing from a remote location? Iím not legally allowed to work in the USA without getting a green card; I have thought about spending some time in the US volunteering for VITA but the timing for that would be hard to fit around kidsí school schedules.

It's reasonably important to have experience. I would say the biggest factor is less about tax knowledge, and more about learning the process of how a tax return is reviewed so that you know how to do this by yourself and catch common errors. It's hard to learn without having a few of your tax returns torn apart by a more experienced accountant.

I'm not certain I would let it stop me, though - there are a lot of awful accountants out there. It may be hard to become "great" without experience, but you can strive to be not-awful. If that's the case, you'll want to rely heavily on comparing your return to the prior year's return to make sure you're not missing anything and learn from returns that are professionally prepared by someone else.

CPA problem - the CPA licensing is state dependent and most states have a residency requirement. Off hand, I think a recall that Maine and Illinois may not require residency. Every state has an experience/supervision requirement (as far as I know) of at least one year, where you need to work under another CPA to get licensed to practiced. You may find out that becoming an EA makes more sense for you.

Efiling problem - I think it's a lot more difficult to get an EFIN and E-file from overseas. And it's hard to get professional tax software without an EFIN. Just be aware that there are hoops to jump through.

Doubleh

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Re: Any Enrolled Agents/ tax preparers want to chat? (USA)
« Reply #16 on: March 31, 2018, 02:13:51 PM »
Thanks CPA Cat, that's helpful too. I've looked into state requirements a little and I think washington state looks like it should be manageable from what I can see as they don't seem to require residency and while you do need a CPA to attest to your experience they don't need to have been your supervisor. The EFIN is another winkle I hadn't come across yet - I did get a PTIN previously but hadn't realised EFIN was a completely separate requirement. Looks like there should be ways to manage that.

Your comments about understanding review being key are particularly helpful, if I do go down this route in earnest worst case I guess I could try to find a CPA who could coach me outside of tax season.

Good food for thought, thanks.