How pleased were we to read the latest article in the New York Times by economic reporter Adam Davidson, "What’s an Idea Worth?".
Though billing by the hour is standard operating procedure for most accountants and lawyers, the article reveals how this system pays for routine, unimaginative work, and does not compensate for the real ideas that positively impact business health.
We talk to accountants all the time about the black hole of the "nanny tax" process. Clients call up in a panic: "Put my nanny/eldercare/housekeeper on the books!" The task is deep in paperwork and short on creativity. And accountants have told us that they can never get paid enough to take this work on for their clients, though they often feel they must in order to serve their needs.
Here are some points made to us by accountants we have interviewed on the matter:
- "Don’t start." Once you start processing the "nanny tax" paperwork for your clients, you can’t stop. To a client it will feel like you’re not willing to do the grunt work while you’re pining for the estate or international or corporate assignment from them. But the truth is, you do care but can't make an honest buck at it!
- "I can't make any money on the 'nanny tax.' " We've been told that accountants often counsel newly minted CPAs to stay away. Don’t be lured by the alleged income you feel you need to take on what is mostly a bookkeeping function when you’re starting out. Once you’re busy with 'real work' this will just become a burden.
- "There are invisible traps that only become apparent after you've agreed to a fee for handling the “nanny tax." Multiple residences, domestic workers who travel with their employers, and other complexities add layers and layers upon an already cumbersome administrative process.
- "People change household help all the time. This means redoing the same 'nanny tax' processes over and over for the same fee." Saying “no” to additional changes to domestic employee status for a client is not viable for most client-sensitive professionals. So, see #1.
- "It goes way beyond the nanny taxes." Your client expects you to counsel them on labor laws, work authorization, paycheck withholding, state insurance requirements and more.
If you’ll pardon the sales pitch, this is where services like Home Work Solutions come in. Accountants refer to us all the time because our 20-years of experience and turnkey domestic employment tax and payroll systems are automated to account for changes in regulations and legislation, as well as individual client adjustments that impact tax filing.
Accountants breathe a sigh of relief when they find services like Home Work Solutions/4nannytaxes.com. And their clients feel this most acutely in their wallets. For anywhere from $500 to $1000 per year, it all gets done. Try calculating your hourly rate if you were to bill hours against that fee. Encouraging your client to outsource this specialty bookkeeping just makes sense.
