I was looking at my Year-To-Date (YTD) fees and invoices this year until the end of June 2007. Here is the breakdown of my billings to June 30th – by type:
16.57% – Monthly Bookkeeping and related services (EPD, PST, GST, etc)
63.57% – Year-Ends, Notice to Readers, Consultations, Systems and Training
>>> subtotal – 80.14%
19.86% – Personal Income Tax Preparation
>>> total – 100.00%
(before my online earnings)
My Thoughts – Tax Preparation
Time-wise – with the learning, the tax research, the tax forums, the tax software updates, Canada Revenue site reading of updates, and the reading of a LOT of related blogs in my Bloglines – I would say that it FEELS like the income tax preparation aspect of my business is taking up 65% of my time.
Cost-wise – with the extra boxes of paper that I go through during tax season, the many laser printer cartridges and color inkjets that I end up using, the cost of annual updated tax software, postage and delivery for returning client copies and client records … there is more of a cost related to the Income Tax Preparation. In fact, I would suggest that at least 50% of my real out of pocket costs come in the months of March and April every year – for the entire year.
Also, although I have worked in public practice since 1985 in Chartered Accountancy firms along side my father (who is a C.A.), and am very apt with my research skills … I am not a C.A. nor do I have any professional designation. I do tend to know my own limits. On occassion I will consult with tax professionals and, in most cases, do not pass on these fees. I find it’s a better use of my resources to just obtain the best advice from a knowledgeable source so I don’t have to spend 100 hours before I am able to offer the best advice for certain clients or situations. So, I don’t really consider these type of subcontract fees to be a real cost of income tax preparation .. more like an opportunity cost – opportunity of use of my time.
Conclusion – It’s been like this for several years now, and I think for the balance of 2007 I will be contemplating reasons and benefits of why 20% of my billings on an annual basis takes about 65% of my time and at least 50% of my real costs.
My Thoughts – Financial Statement Preparation
All the monthlies, and related services really help make my work easier when it comes time to prepare annual financial statements .. because I am more in tune with what’s going on, what questions to ask, what documents to obtain, and take year end considerations BEFORE THE FACT into consideration, before the year is over.
What is not quantified, is that the year ends of corporations do have shareholders and owners of non-incorporated companies, and I also do their personal income tax (for their personal income tax return), or in addition to the preparation of the corporation tax return. No billings would be reflected in the 20% Income Tax Preparation figures .. because the client would be billed in the business and not personally.
Time-wise – this aspect of my business is my bread and butter. More time is spent and I am more focused. For income tax returns, I could be productive moving from tax return to tax return, then get off tangent and do tax research, participate in forums, searching CRA sites, etc etc, and then hold everything up in my ToDo box. Unfortunately, it’s the same with the companies. Because most of my client’s work takes time, I often find that I am more productive and there is a time saving overall to my client if I can alot a good period of my time to just work on a client’s file and get the job done. I might have monthlies to do, or have online activities to catch up (email, comment responses, or even get lost in my Bloglines)
If I have too many jobs in progress, or working simultaneously .. I find that I am picking up and putting down the information too many times and I get unproductive figuring out where I left off from last time. It’s not good to overcharge the client. Unfortunately, everybody’s job is important and a “rush” and I decide to just work on the FIFO basis in my ToDo box (First In First Out). Sometimes, longer jobs do hold up faster jobs that could be finished already .. but, if I did all the smaller jobs first – I would never get to the larger jobs.
Cost-wise – there are real costs, of paper .. colored paper and hard covers, inkjet cartridges, paper, tax software (T2 and T4), and most of my courier costs – not to mention envelopes and other office supplies like 7-column pad paper and other stuff. I prepare and bind several copies of financial statements and create files like crazy every year.
I have tried to subcontract the bigger jobs out to get lower priced help to input raw data, but it has never worked out for me personally since I’ve been on my own since 2003. Because of my piano and keyboard skills .. I can input a job in about 25% of the time that an underling can. Although, this underling might have a rate 25% of my rate, it never evens out because I usually have to double check everything or fix a lot of errors. Most of my clients have been long-time clients and I have many clients that my dad had been servicing since the late 1970’s. I think that I am familiar with my client’s businesses and I do believe I am quite efficient at what I do.
Am I looking for New Clients?
I wish I can say that I am looking to grow my offline business. I should be looking. But, new business is still finding me, and I am expanding my existing base of clients with new services, if I can. All this makes me already overbooked, and sometimes I wonder why I accepted new business.
I always keep in the back of my mind that I should be working smarter, not harder … and only heed that advice maybe 75% of the time.
I still enjoy working out of my own home .. being a stay-at-home dad to our two Papillon dogs (Maxxie and Sophie) and our cat (Zeussie Pussie Cat). I don’t think I am prepared to expand my business to a point where I have to move out of this location into a more public location .. or shared location .. or even partner up with another individual in a cost sharing relationship.
That is .. unless I can combine it with my online activities. If I could be independently successful online with the blogging and other online ventures, and instead of my online activities being the “hobby business” .. my accounting and offline business is the “hobby business” .. I would love to work full time with my wife doing accounting and blogging full time, 3-4 days a week.
Unfortunately, my wife doesn’t like to blog. Oh well!~
HBS Management Consultants – Online Activities
And speaking of online activities .. YES – I am trying to do other things, unrelated to accounting and bookkeeping and income tax. If you are unaware what I am doing .. look at the sidebar and see the sites of the HART-Empire Network. Personally, I am reporting everything as a division of HBS Management Consultants, and as a proprietorship. I have been thinking of incorporating for years, but have yet to do that.
I am finding that it takes more and more of my time blogging and posting content across the many blogs that I have, and in 2006 .. I had to slowdown my online business drastically to a standstill .. in order for my offline business to strive. In 2007, I worked like a son-of-a-beach trying to maintain the growth and levels of the online business .. and there were many days that I stayed up for days on end. I was convinced I could switch the calendar to a 6-day week by changing my work day into 28 hour days .. and sleeping 6 hours only 6 times every 7 days on the calendar. It’s amazing what a work load, adrenalin, wake up pills and drive and determination will do to your sleeping habits. And, I can say now – that it takes about half a month to get back to normal time.
Projections for 2nd half of 2007
Well, for online activities .. I hope it’s exponential 🙂
For my offline activities, I will struggle like I do every year to collect money from the slow payers and getting the larger jobs and billings out and collected.
I think the time issue maintaining my online activities might finally come to head. I can’t keep growing and slowing down in the postings and still experience all the costs associated with growth. I need to find quality bloggers to write for me, and take over a few of my blogs on a shared revenue basis .. (do you know anybody interested? :D)