How do you know if you are paying too much for a CPA?

[Juliette Lerner]

Is there an average price to pay for multi-state tax returns (3 commercial and 3 residential rental properties) in California? I believe I am being overcharged but it seems like a huge risk to search for and switch CPAs if that is the case. How would I reliably know that another CPA will do a good job for less money? Any advice on potentially switching CPAs or what to do if you think you are being overcharged is very much appreciated!

[John Woodrich]

Another CPA opinion here - it is impossible to say what something should cost until seeing it.  I have clients like @Bill B. who are likely very organized, preparing 10-20 rentals is simply a data entry game and dealing with any changes.  I also have clients who don't do a very good job on accounting for anything and they are a complete disaster that cost more.  At the same time, with certain clients, the more time we spend on them, the more it costs but they save more money....  I have a few people who are executives who were getting their returns prepared for free at EY who now pay to work with us because of the tax savings on their RE transactions.  Simple things like cost segs were missed, they were paying net investment income tax, etc.  Was easy to save thousands. @Yonah Weiss helped with one last year on a client of mine down south.

You will also find different rates based on where you are paying for services.  In California you are going to pay a lot more per hour for tax services than if you decided to find a firm in the south or the Midwest.  Cost of living changes things up quite a bit, a CA CPA may charge $300-$400 per hour while you may pay $200-$300 in MN.  Most firms leverage staff at lower rates for prep however figure it may cost 25% more in a certain area.  It will also cost more if you have many state returns to file but that shouldn't be significant.

If you are looking to save money and stay with your CPA you may want to find someone else to complete the bookkeeping as I am guessing in CA the rate at the CPA firm is probably $125 or more per hour for bookkeeping services.  Hiring a bookkeeper or a bookkeeping service may save money unless the CPA does it all in their down time.  Most CPAs will give you a rough quote if you send a copy of your returns.  Doesn't hurt to get a couple opinions.