For someone who has not used a CPA firm, billing may be a mystery, but it is not complex. Like any other business, we must charge enough to cover our expenses. What are these expenses? CPA firms have large overhead costs; we pay several thousand dollars every year for our tax software and additional fees for every federal return, every state return, extension, and e-file. We also pay several thousand dollars for the tax research literature. Accounting and audit professional software also costs several more thousand dollars annually. Annual licensing fees, dues and AICPA memberships are also expensive. To meet licensing requirements, we send our staff to at least 40 hours of continuing education every year, which not only is expensive but also takes staff away from their work and ability to earn money. And of course, we have standard overhead costs, including rent, utilities, insurance, computers and computer security and upgrades.
The highest cost is, of course, personnel. Our employees are our most important asset. They are the ones who work long hours during tax season, and travel wherever the job requires, sometimes overnight away from their families, to get the job done. They must stay up to date with constantly changing tax regulations and audit and accounting standards as they become more and more complex. Before they can become CPAs, they must complete 150 hours of college credit, have two years of professional experience and pass a very rigid and expensive four-part exam. There is a shortage of accountants nationwide, but in Maine, especially Bangor and north, the shortage is huge as young professionals move to states with more opportunities. This makes a professional accounting staff even more valuable and retaining them is crucial.
As a CPA firm, we have no product to sell, other than our knowledge, so we bill for our time, including phone calls and e-mails. We also bill for expenses incurred, such as travel, postage and software. In the past, we have assigned billing rates to individuals. Staff would have lower rates, while partners were billed at higher rates. However, to make billing more equitable to clients and eliminate their worrying about the rate of the person performing their work, we have gone to a new method, where the billing rate is assigned to the type of work. It will not matter whether a partner or a staff person is preparing your work, the rate remain will be the same based on the type of work. We will continue to have all work reviewed. We want our clients to be assured that they get quality service without worrying about the rate of the person performing the work.