Does your CPA charge when you ask a question?

Question

Richard C. · Answer

Let me answer as someone in professional services myself.

We get paid to give advice.  To answer questions, if you will.

We get paid for our time, which is all we have to sell.

We get paid to do the research necessary to answer those questions.

We get paid to take on the liability (and carrying the E&O insurance) of possibly answering those questions incorrectly.

I don't get charged, nor do I charge, for simple questions that can be answered instantly from prior knowledge.

But determining what your tax liability is, if you should sell some properties, could be a fairly complex question to answer.  And it certainly opens your CPA to liability of he answers incorrectly.

If he has to spend time answering your question, and assume liability by answering it, you should expect to be charged for it.

Brandon Hall · Answer

The problem is that you have a CPA who thinks their time is worth something. That's the biggest misconception CPAs (and attorneys for that matter) have. They think that just because they spent time on it, they should be compensated.

What these folks completely miss is that fact that their time is actually not valuable at all. The value they provide during that time is what the client wants to pay for.

If a CPA takes 10 minutes and saves you $10,000 (trust me, it can happen), should the CPA charge 1/6 of their hourly rate or should they charge you $1,000? Let's say it's not a CPA, it's just a consultant, would you pay them $1,000 to save you $10,000? Of course you would. Regardless of how long it takes.

CPAs literally de-incentivise themselves when they bill per hour. They think every minute is worth the same amount of money which is hogwash. There's no form of value pricing involved. They don't have an incentive to work harder or smarter, just longer.

So to answer your question: should your CPA charge you for the email exchange? If they provided value, absolutely. On an hourly basis? Absolutely not.

But if that's the CPA you chose to work with...

We scope annual contracts on a per client basis and bill our clients a fixed monthly rate. It includes phone calls, tax returns, and unlimited email support. So our client are inherently paying for the email support, but they don't get a bill every time they send us an email.

Daniel Hyman · Answer

Thanks for the mention @Yonah Weiss!

@Larry H. As with anything in billing, the main thing is transparency. The fee structure should be spelled out clearly in the engagement letter. Whether you are paying a monthly fixed fee, annual fixed fee, or hourly rate, you should know the price tag of asking a question before you ask it.

That being said, I agree with @Nathaniel Busch. I believe most CPA's who bill hourly would not charge for uninvolved questions, but would expect to be compensated for complex questions.

Paul Allen · Answer

Not to get all Zen on you, but your disappointment is a function of your unmet expectations.  You can either adjust your expectations or find a CPA that meets the ones you have.  I recommend the latter, then discuss those expectations with him/her in advance.

Best of Luck on Your Real Estate Investing.

Nathaniel Busch · Answer

Hello @Larry H. !

Obviously every situation is different, but if your question was pretty simplistic (ex "Hey, if i sell X property for $XXX, what's my gain?") charging seems a little overzealous (this coming from a CPA).

I try to look at my client interactions an awful lot like my interactions with my contractors on my properties. If I have a question for my realtor as to what my local comps are for a property, I probably wouldn't be pleased if my realtor sent me a smaller bill for that time to do the comp's.

I realize it's not an apples to apples comparison (as realtors usually receive a commission), but in the world of real estate I find investors like that approach (as it aligns with their normal communications with other contractors in their business).

Obviously, there are situations where charging could be appropriate (i.e. asking how to properly structure a 1031 across 5 properties, etc.). As long as the CPA notifies you beforehand when they are billing, I think that's a reasonable approach.

Yonah Weiss · Answer

@Larry H. That sounds a little petty to me. I think the billing of a CPA, or any trusted adviser should be based on their time involvement, or flat monthly/annual fees.

A CPA is not something you are stuck to for life, you should reach out to @Daniel Hyman CPA -My Online Accountant, LLC  They specialize in RE. Best of luck.

Account Closed · Answer

I typically don’t charge if it’s a quick question I can answer in a few minutes.  If it’s skmething I know I will need to spend time on I let my client know and then he or she can decide if they want help with the specific issue or not.  Sounds like a communication issue  with your CPA.

Linda Weygant · Answer

Every CPA charges differently.  For my clients, if they have a theoretical question (Will the sale of a rental property generally be taxable?), then I don't charge for that because I can just answer that type of question easily, it takes about 10 minutes to explain the theory and that's it.  I can have that conversation while I'm doing another task because it's just a conversation at that point.

But if the client actually wants me to run calculations and What If scenarios, then that's different.  (How much tax will I pay if I sell this house for X dollars?).  Now I actually have to pull your file, sit down at my computer and run the calculation.  I can't do anything else while I'm doing that.  While it may still be the same 10 minutes, it's a different type of work.

In general, however, I won't bill for anything less than 30 minutes.  I'll note the time and when I'm figuring out your bill for your tax return next year, I may round up a bit to include this kind of time.

Jana Cain · Answer

I only charge my clients for deliverables. So if the expectation is a financial model of the tax hit for various sell scenarios, I would tell the client up front what such an analysis would cost. If the question is phrased more generically, or the expected answer is more of a concept/rule vs a specific number, that isn't likely to warrant a charge.

Every tax pro has a different model for how they handle this. Sounds like some expectation setting is in order.

Does your CPA charge when you ask a question?

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