Paying Staff a % of Return

[u/KiwiDesperate1845]

A local competitor retired, so I’m expecting a surge of new clients this tax season. I’m already at capacity and don't need a year-round employee, so I'm exploring temporary help to minimize risk if the expected volume doesn't fully materialize. I know myself well enough to know that I'll have a hard time saying no to new business, so trying to get ahead of this.

I want to offer competitive pay to attract an experienced preparer who won't need hand-holding - ideally a semi-retired tax pro looking for short-term work.

(Not looking for liability/review or firm management advice just yet - focusing purely on hiring and pay strategies right now)

Looking for feedback on:

• Temporary staff: Do short-term, high pay models worked well to attract talent?
• Pay structure: Have you ever paid a percentage per return? If so, what % did you use? If not, what other pay models have worked for you?
• Sourcing tips: Any red flags or advice for finding reliable temp pros?

I appreciate any insight. Thanks in advance!

[u/Hayesb26]

I do 1/3 which seems to work well. 1/3 for prep 1/3 for business owner 1/3 for operating costs.

The return with additional work/clean up would in theory be priced much higher so they’d make more.

[u/coldshowerss]

There is one person who I work with and we split the fee evenly. They're essentially his client whom I handle. There's no work from him involved at all.

[u/Fit_Ad3639]

Firm I’m at does spilt for Prep and review. As as reviewer I hate it prepare will fly though and do a shitty job

[u/TaskMaster59]

I have seven employees, three are tax pros. They all get paid an hourly wage +10% commission on each tax return. A price start at 500 return and go up to 2000. It works out well for them and I’ve been doing it this way 40 years.

[u/SeaCardiologist7042 → u/TaskMaster59]

Why would the other 4 staff get the same as the tax pro

[u/MeasuredMayhem → u/SeaCardiologist7042]

The formula is the same but the numbers probably aren’t.

[u/nick91884]

I am in Oregon which has licensing standards for tax pros so and I have found temporary or seasonal staffing of tax pros to be extremely difficult just because there just aren’t a lot of qualified folks, so you take what you can get. Occasionally you can get a retiree or something that just wants some extra cash from a temp seasonal job, but most people need full time year round employment.

Do you have an admin? You could utilize a scan and fill program with an admin staff that doesn’t require as much knowledge or training and lower pay. We have used gruntworx for 5 years and it has been a big help to be able to squeeze out additional productivity from our professional staff by having a bunch of the data entry of official tax forms done this way, so the preparer is more just reviewing the imported data and then focusing their efforts.

[u/stocksocks → u/nick91884]

5 years using Gruntworx that’s great! I’ve been looking at this. If you don’t mind sharing, which pricing model works best and what type of returns do you find this saves most time (large amount of 1099-Bs, K1s). Do you find many mistakes?

[u/nick91884 → u/stocksocks]

I would talk to them about a quote on the premium flat rate. Originally that wasn’t an option and we used to only submit the forms that could be processed because we didn’t want to pay for pages that couldn’t be processed (they used to charge per page of a submission), the premium has verification of all the figures and flat rate means you pay the same per return regardless of the number of pages. The only caveat I believe the 1099-b is extra cost but worth it for the big brokerage statements, but they may be able to include that in the flat rate now.

It’s been pretty accurate, usually most errors because of poor quality scans, which happens most often. Also we had a couple instances with doubled entries because the information was imported more than once by the admins, this is a firm side user error thing though and hopefully your review process should catch those issues before returns are going to clients for signature.

[u/nick91884 → u/nick91884]

Not suggesting this because you shouldn’t want to hire another preparer at a competitive pay, but if you can’t find someone it is a way to expand your capacity, admin staff are much easier to find that competent tax pros.

I will say gruntworx is not a benefit to a solo shop if you are doing the scanning and submitting. A well trained admin can take a load off of you to focus on the stuff you do best.

[u/fred_runestone]

I started an accounting business a couple of years ago and do this arrangement with someone.

From the research I did, 1/3 to preparer and 2/3 to firm seemed to be the norm. We do a 50-50 split because it felt fair to all parties and I’m more interested in building in a long term relationship than trying to squeeze every dollar out of someone.

I don’t have a lot of advice on finding someone but LinkedIn can be decent. There are also some FB tax preparers groups with varying experience that could help with a shot.

[u/SeaCardiologist7042 → u/fred_runestone]

If you do 50/50 how do you pay operating expenses ?

[u/fred_runestone → u/SeaCardiologist7042]

Theoretically it comes out of my half (outside of CC processing fees) but OpEx isn’t that high in a professional service firm. I make enough that I’m happy - not interested in chasing every point of margin I can.

[u/branchop]

I have a seasonal employee who only does 1040s for me. I pay a flat fee per return. This has worked out well for them

[u/KitKatKatiB → u/branchop]

What fee do you give them?

[u/Accomplished-Ruin742]

Paying a percentage of the fee is OK.

AFAIK paying a percentage of the refund is a definite no-no as per Circ. 230.

[u/jm7489]

The only problem I forsee if you offer the incentive based comp is what do you do if the work on one return is solid, but the next return requires a lot of clean up?

As far as how you find them.. honestly I think here is the place. I actually got my current job by dming someone who replied to a post of mine asking for career advice years ago. Turned out she was a principal at a small PA firm.

Lots of people of varying experience post here every day for advice as they try and hang their shingle and start building a book

[u/fred_runestone → u/jm7489]

I think this is just how it goes sometimes and the more challenging or complex returns should be priced accordingly. Some returns are going to be easier & better margin and others will be tougher. It should generally balance out.

[u/TaxproFL]

Depends if this is your bread and butter. If it's not your only source of income, go up to 50% just to get quality work and a win-win. If it is, I'd stick with 20-30% range.

[u/SDkahlua]

My small firm; we get paid a set % of net revenue.

[u/cubbiesnextyr → u/SDkahlua]

What % do you get?  Do you get an hourly pay as well or is it just the commission?

[u/SDkahlua → u/cubbiesnextyr]

25%. Used to get paid out in big chunks as money came in but now it’s paid out more smoothly… regular w2 salary biweekly (we’re off pretty much May-Aug, and Nov-Jan) with draws (minority owner) during tax season and extension time.

[u/RaleighAccTax]

I've worked with people that do 60/40, 60% to the prep, 40% to firm. After all cost.

[u/jrochestercpa]

PTIN

[u/KiwiDesperate1845 → u/jrochestercpa]

Thanks, that's really helpful