Why I settled on Annual Flat Fees

Why a flat annual rate? If you have ever worked with a lawyer or a consultant good chances are you paid a retainer and work was done and billed against that retainer at some set hourly rate. This means every phone call, every e-mail, every document is scrutinized down to 6 minute increments.

While this is advantageous to keep meticulous records, it also creates a quick churn or burn rate meaning if every action taken on your behalf is tracked in 6 minute increments, 4 minutes on the phone is often rounded up to 6 minutes and if more frequent, those extra minutes add up quickly.

Let’s do a simple calculation. There are 10, 6 minute increments in an hour. So if you agreed to an hourly rate of $200.00 then a billed .1 or 6 minute phone call is billed at $20. When calling the IRS, it will often take an hour to complete a call if not longer, so that would be a $200 phone call. You can see why if stuck with a “Billable hour” your bill will add up quickly and you end up paying more than you might have expected.

A reasonable $5,000 retainer would essential buy you 25 hours of work on your behalf. Depending on your situation, that $5,000 might not last long. So why would someone (attorney/consultant) who stands to double or triple that figure consider an annual flat rate?

There are several benefits to both parties, the rate is set from the beginning, there are no surprise bills, work isn’t stopped due to inability to fork out another $5,000, all work can focus on the work and what is best for the client and not how to increase the billing, clients don’t have to worry about how much a phone call is costing them and can instead focus on results and getting all the information needed instead of cutting conversations short or not answering a phone call.

Of course there are some potential downsides, including thoughts about how much could’ve been made on the billable hour, or fear that they could have paid less if less work was done.

The upsides of an agreed upon annual rate, creates more open communication, less worry about how much is being paid and the client can assess whether they can afford full representation, knowing the cost upfront also provides peace of mind that no additional bills will be coming their way.

By setting up an annual flat rate, and fully explaining the work to be done, sets the working relationship up to succeed, it then becomes in the clients best interest to timely respond, get work done on their behalf and track results. The other downside not mentioned above is specific to working with the IRS: The IRS processes can take a significant amount of time, there are specific processes to be followed sometimes you can be left waiting for the IRS to make a decision or process something you had submitted. However, having the peace of mind knowing that you are being guided by someone that has your best interest in mind, has experience dealing with the IRS with your similar issues and ensure you are getting the best deal possible given your situation should make it easy for you to determine if this is the best option for representation.

I specifically limit the number of clients I work with, as it is imperative to be able to give full attention to each client and take timely action because penalties and interest will continue to accrue daily. Click here to schedule a Free Confidential Consultation.

-Aaron Scott

Tax Debt Consultant