Tax Accounting Career Guide and Counseling

Question: How much should an accounting business charge in annual accounting/tax prep fees? I'm doing a little research on accounting & consulting fees. I work for a nationwide niche firm that has about 1,500 accounting clients (including tax prep) averaging about 700-800K per year in operating revenue. I believe we are undercharging for our services. Our average accounting fees are about 1% of revenue or 7-8K per year on an average client. We do perform some other services like collections, payroll, financial planning, etc. on some clients raising the total amount to 1.2-1.3%. Do those seem like appropriate percentages? I'm curious what type of benchmarks others have in their accounting and tax businesses or if anyone knows of a good source of information for this type of thing. Any input would be much appreciated as I am looking to possibly buy this business in the future.

Answer: I can only tell you about business management - taking in all of the money and paying all of the bills, in addition to doing all of the tax work. The percentage that I am going to give you also would include insurance services (taking care of the insurance needs of the clients, such as automobile insurance, insuring valuables, etc.) These firms do not sell insurance; they handle all of the insurance matters for the clients, including dealing with insurance companies, brokers and agents, etc. I know of firms that charge 5% of earned income - not net income. Some clients are also charged a minimum fee in addition to the five percent. Minimums can vary from $1500 per month and up (sometimes less for smaller clients who may not pay any minimum at all). I am not familiar with your particular situation, in terms of exactly the types of services that you provide. I can tell you that what I have described above is accurate. I hope that this helps.

Question: Tax/Accounting? Interpret each of the following citations: a. 54 T.C. 1514 (1970) b. 408 F.2d 1117 (CA-2, 1969) c. 23 AFTR2d 69-1090 (CA-2, 1969) How do you come up with the answer? The book that I have doesn't tell you how to interpret. And what are the answers? Thanks for the assistance, greatly appreciated. And for Beach Lover, you're an ass! Jerk!

Answer: Using research, you are supposed reach your own interpretation. Tax Accounting requires a high amount of critical analysis. Your class is trying to teach you how to think on your own. True tax accountants rarely get asked tax questions that are simple to answer. If the questions were easy to answer, then a client would easily find out the answer himself/herself. If tax accounting is not your cup of tea, then try the management accounting route for your degree. Either way, it is more helpful to pay attention in class. Honestly, this is reality. Sometimes the truth hurts. But how you deal with reality helps to determine your success in your career.

Question: What can I do with work experience in tax accounting? I will be starting an entry level tax position at one of the Big 4 come June. If I decide that I don't want a career in just tax, what other opportunities are out there that my tax skills will help me be more competitive? I am also planning on getting my MBA after a few years of work experience.

Answer: Limiting yourself to just taxes is going to limit your opportunities. Consider a broader base in accounting - you can be very successful as a CPA with an audit firm, for example. Good luck!

Question: tax accounting? 2. Selling a ranch, adjusted basis equal $212,000 and a mortgage of $190,000. An amount realized on sale of a ranch consists of $110,000 cash given by a buyer, $190,000 (mortgage that the buyer take the title subject to), plus the buyer will pay $80,000 with 9 percent interest a year from the sale date. What is the realized and recognized gain? Do we recognize any portion of the $80,000 and 9% in terest that will be received one year from the sale? The realized gain is $168,000, but the recognized gian is not the same.

Answer: (110+190+80)-212

Question: Do I have to be a CPA to open my own Accounting/Tax/Bookkeeping Business? Hello. I was wondering if I need to be a CPA to open an Accounting/Tax/Bookkeeping business or if I could open my own Accounting business by having a Bachelor's of Science Degree in Accounting plus work experience? Thanks in advance.

Answer: No, you don't need to be. It will be harder to build your business as many customers will only use a CPA.

Question: How does tax accounting work for Business to Business payments? Do payments made to corporations get reported to the IRS the same way they do for 1099?

Answer: No. You do not need to send a corporation a 1099 for payments for service (the exception being a law firm, even incorporated they should get 1099s). There is no other method for the IRS to check up on the income reported by a corporation other than doing an audit. The idea behind the 1099 form was to get smaller business/indepedent contractors (parternships, LLCs, and individuals) to be forced to report their income. Apparently the government wasn't as concerned with corporations underreporting their income.

Question: In Tax Accounting how do you find a basis if adjusted basis and fair market value is given? A has200 shares with an adj basis of 120000 and FMV of 250000 so in that case what will be the basis of A?

Answer: Your basis is your original cost, reduced by accumulated depreciation, if applicable, and increased by any additions you have made, and any cost of disposition. Adjusted basis vs market value = gain or loss

Question: How would an Accounting, bookkeeping, tax business run? I want to go to college and study accounting. After that I hope to earn my CPA then have some experience in the work field. I then hope to open a tax and book keeping business. Will it bring in a decent amount of money? How much would you say you could make of such a small business?

Answer: Bookkeeping is lower dollar - you can hire someone else to do that sort of stuff. CPA - now you're talking! Say, oh, about $150 per hour. But the downside is that you have to keep up on all the new tax regulations and such that come out every few months.

Question: Tax and Accounting Software for self-employment? I'm trying to find a good, relatively easy to use, tax and accounting program for a small sole proprietorship. Any suggestions?

Answer: I really like Quickbooks. Very user friendly and extremely easy to set up. Great for Small business in my opinion. Check it out.

Question: How can I find a US real estate partnership that I can become a partner in exchange for my accounting and tax? .... in exchange for my accounting and tax services? I was thinking that a partnership could save cash flow if a partner was capable of doing these professional services. I'm a CPA and am exploring the possibility of doing the professional services for a partnership interest.

Answer: Here’s a very short story/anecdote, concluding with a very old saying which I heard on a tape: On a very cold winter day, a man is sitting in front of his wood-burning stove demanding heat: “Give me heat - then I‘ll light the fire.� I think the above applies to your situation. I never heard of anyone getting a position “at the top� without “paying dues� and proving himself or herself to those he/she works with AND the people at the top. To me this is A] the ability to properly understand and interpret the tax laws and statutes as they apply on the local, county, state/commonwealth and national levels; B] properly communicate and work well with those folks in the office and in the field where the properties are located; C] understanding and completing all reports and communications on a consistent, timely basis - on-time or ahead-of-time - every time for an extended period of time [how long and what those reports are is another matter]; D] the ability to make presentations as to why or why not a procedure [or a deduction] works or doesn’t work [notice I didn‘t say “may“. When working with numbers, as far as I‘m concerned its cut and dry - “Yes, it will work.� OR “No, it won‘t work.�]. E] "Going the extra mile" - not because you have to do it or you were asked or told to do it, but because you KNOW its the right thing to do AND YOU KNOW IT SHOULD BE DONE. I won’t discount your ability or claims as a CPA, but FIRST you have to prove you are THE person - as I described above (which "only scratches the surface") for THAT position to your co-workers as well as the members of the Board of Directors. Would I hire you? I really don’t have an opinion - one way or the other. This requires interviewing you, “putting you through your paces� on a trial basis and discussing how well [or not-so-well] you did with those you work with as well as the other Board members. You have your work cut out for you, don’t you? I wish you well! VTY, Ron B.

Question: Help with Income Tax Accounting class? I am currently taking an income tax accounting class online, and I am having some difficulty grasping some of the concepts in the book. Does anyone know of good reference material to assist me in the learning process? The book that is required for class isn't very tutorial. It more or less seems to just talk at me, without aiding me in grasping the terminology. I hate getting sub-par grades. I really shouldn't have taken this class online, I guess.

Answer: I think this is the nature of taxes. Often dry and confusing. Are we talking about individual taxes? If so, perhaps publication 17, from the IRS website may help. Its the IRS guide to preparing individual tax returns.

Question: What are the main prinples of tax-effect accounting as outlined in AASB112 income taxes? it is for company accounting.

Answer: What does AASB112 say? What can you logically deduce from that? There's your answer - or you'll find your answer in your textbook ;)

Question: What’s the best and easiest software to use for an LLC accounting and/or tax needs? What’s the best and easiest software to use for an LLC accounting and/or tax needs?

Answer: There is not one package that will do both Accounting and Taxes. Quickbooks should do everything that you need from the accounting side. Find a CPA/EA for the tax side. Many tax programs can input data directly from Quickbooks (assuming Quickbooks has been set up correctly).

Question: Do I have to remit/charge sales tax on accounting and tax services? I've decied to start my own business but I was wondering If I needed to charge/remit payments to my state for sales taxes. If so, what would my rate be? I live in Utah.

Answer: Services are not taxable. Goods are taxable. Each state has its own website, on it will be a link to its Board of Equalization, or sales tax department. If you are buying and selling any goods along with your service, apply for a permit. They will send you your SBOE number. You use this to omit paying sales taxes for the business goods you purchase, and you use it to file monthly with the state for any sales taxes you collect on goods you sell. The rates across the nation are changing now.

Question: At what level would a CPA with 3 years of corporate accounting (non-tax) experience start out in an IRS job? I have passed the CPA exam. I do not have tax experience other than doing my own tax returns, but I am very interested in tax and read a lot about taxes in my free time. I would like to apply for a tax job at the IRS, but I am a little concerned about a possible pay cut. At what pay level would someone in my situation typically start? Thanks.

Answer: I believe your education and CPA title qualify you for at least GS-7 government job but then again the IRS does not pay too well. They do have great benefits so that may offset the pay cut. Oh, at GS-7 you are probably looking at about $48000 a year.

Question: In accounting, would Tax be considered a liability? Taxes are technically accounts payable, right? All "payables" are liabilities. So would tax affect the basic accounting equation? (assets=liabilty + owners equity) Or is tax a completely different thing in the world of accounting? This isnt a HW question btw, i would just like to know

Answer: Taxes could be a liability or an asset depending on the company's results. A tac liabiltiy will ocurwhen the company is profitable and has recognized tax expense. The liability represents the amount of tax owed to the government. An tax asset can exist if the company is losing money and entitled to a tax refund.