The average fee for preparing an itemized federal and state individual tax return was $233 during the 2011 tax season, only a 1.7 percent increase over 2009.
However, fees for non-itemized returns declined slightly, according to a survey released Thursday by the National Society of Accountants of nearly 8,000 tax preparers across the country. The average cost to prepare a Form 1040 and state return without itemized deductions was $128, a 0.8 percent decline from 2009.
Accountants kept their fees largely the same, the NSA concluded, as their clients went through a difficult economic time.
The survey also measured data about accounting operations. The NSA found that 59.9 percent of accountants’ gross income in 2010 was generated by preparing federal and state tax returns. Other significant sources of gross income included write-up work (18.1 percent), payroll preparation (7.2 percent) and tax services (5.1 percent).
Credentials are very important, the NSA noted, and many accountants hold multiple credentials: 45.1 percent are enrolled agents, 26.8 percent are accredited tax preparers, 24.7 percent are CPAs, 21.7 percent are accredited tax advisors, and 14.5 percent are accredited business advisors.
“The results show that the accounting profession is alive and well, serving the increasing needs of individuals and businesses faced with an increasingly complex Tax Code,” said NSA executive vice president John Ams in a statement. “It also demonstrates that accountants are very committed to professional development and earning the credentials that demonstrate their proficiency to clients.”
About 35.3 percent of practices are sole proprietors, while 27.5 percent of practices are S-corporations, while 22.9 percent of practices are structured as limited liability companies. Only 7.6 percent are C-corporations, 5.2 percent are professional corporations, and 1.4 percent of practices are structured as partnerships.
The typical practice, on average, operates as a sole proprietorship, had an annual gross practice income and a net income of $85,247 in 2010, has four full-time employees, two part-time employees, and two seasonal employees. Those that are partnerships typically have three full-time principals or partners, on average.
The typical practice processes an average of 154 non-itemized 1040s annually, and 274 itemized Schedule A 1040s annually. It receive 60 percent of gross income on average from the preparation of federal/state tax returns, charges an hourly fee of $135 to represent clients before the IRS, and has not seen an increase over the past year in audits.
The typical practice, according to the survey, uses personal interviews to collect data from clients, is 41 percent paperless, has salaries and benefits (other than retirement) that represent 41 percent of total expenses, and allocates 10 percent of its annual expenses toward technology needs, including hardware, software, licensing fees and Internet connections.
To order a copy of the survey, visit www.nsacct.org.
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