Switching To Tax Subscription Packages


SaaS (Software As A Service) has been a huge trend over the past few years. While the idea of paying monthly for a subscription to something like Quickbooks or Calendly probably comes pretty naturally to you at this point, the idea of a tax subscription package might seem a little strange at first. 

But trust us, we’re super excited about this change that’s being implemented at Brook Bay Consulting and think you will enjoy it as well.

The problem with the traditional way that accounting firms have billed their clients – the billable hour – is that it simply makes no sense. The desire of the client (that the tax return should be completed in as few hours as possible) is in direct conflict to the desire of the firm (to accumulate as many billable hours as reasonably possible). Also, the billable hour punishes the firm for implementing new efficiencies and modern technology. A business owner in any industry always strives to be as efficient as possible. So why be punished for doing something good?

That’s why at Brook Bay Consulting we’ve never billed tax returns by the hour. We’ve always engaged in fixed-fee contracts so that the client knows up front how much it’s going to cost, and the firm knows how much revenue will be coming in and is incentivized to be efficient (and of course, accurate). Nobody likes surprises when it comes to bills.

As nice as the fixed fee structure is, there are still some limitations. For example, what do you do when a client calls with a quick ‘two minute question’ (here’s a little secret: there’s no such thing as just a quick two minute question)? If you bill hourly, you’re going to send the client a bill for ⅙ of an hour of your hourly rate. Yuck. And even worse, the client will be afraid to call because they don’t want to be on the clock as soon as the CPA picks up the phone. So the questions don’t get asked and good advice is not provided.  If there is a fixed fee contract for the tax return, what happens to questions throughout the year? Is every phone call billed at a fixed rate no matter how long the call is? That also doesn’t seem ideal for those 10 minute calls that everyone needs once in a while.

This is where subscription packages come into the picture and solve a lot of problems.

Let’s say a firm offers three different subscription packages for individual tax clients. Perhaps the basic package just includes the preparation and filing of the tax return and a few other important items. The client knows that they’re picking the most basic package and paying the lowest fee. They shouldn’t be taking up much time from the CPA, and that’s fine, because for a truly basic tax return they probably don’t need much help throughout the year. 

The middle ground package will throw in some more bells and whistles. For example, maybe you have rental properties, crypto investments or other significant investment income and you need quarterly estimated tax payments and tax projections made throughout the year. Perhaps you want to be able to call your accountant throughout the year for all those small questions, and not be worried about being billed for every small phone call. Maybe you also want some level of audit protection or IRS notice response service built into your fees, so you can rest securely knowing that if you have one of these unpleasant surprises at least you won’t have to pay extra to your CPA to handle it for you.

The top level package might cater to the most complex of individual taxpayers that require a fully robust service from their CPA. This package might include items like tax planning services, collaboration with attorneys, lenders or financial advisors, and full audit protection. 

Hopefully this is starting to make some sense.

The client benefits by spreading out their CPA’s bill over the course of 12 months as opposed to paying it all in a single lump sum. The CPA firm is thrilled to spread out its cash flow over the course of the year, instead of trying to run a business that receives 70% of its annual cash flow over the course of two months. Both parties benefit tremendously from removing almost all of the awkward conversations and uncertainty over whether taking a phone call, responding to an email or providing a service is something that should be paid/billed for or not.

The bottom line is, at Brook Bay Consulting we enjoy continually evolving our firm and staying up to date with the latest best practices of accounting firms. We think the tax subscription package model is a win-win for us and you. 

If you’d like to find out more details about our tax subscription packages, please schedule a call with us here.

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