Partners or whomever can help me understand about billing and hours. To keep things simple, let’s say you only have one staff to work 1,700 billable hours a year on a $60k salary and you have only one job that and the rate charged to the client is $300/hour and an projected hours budget of 1,700 hours. So ideally you would have revenue of $510k. If the staff takes less time partners make less money and if they take more time partners make more money while the staff keeps the same salary?

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This depends on fixed fee vs hourly rate. Also, a client won’t pay 300/hr for just staff time. I’d explain more but I’m off this week and on my way to feeling good tonight.

As EY1 mentions, not all hours are necessarily collectible so just “billing more” might just be hours that get written off. Working more, efficient hours will result in higher partner earnings.

Unlike EY1, $300 an hour for a staff is a collectible rate depending on work performed

Is it a fair assumption that partners will bill pretty much their budgeted hours for the job regardless of how much time the staffs spent on the job? I’ve been pressured to “eat time” but when I become too efficient then I’m told to make sure we document every hour we can and the partner will decide if it’s necessary to write off any questions Cessna hours.

I can’t speak to the big 4 billing practice, I’m with CLA, but my clients are typically given an estimate of the cost for the work. So if we tell them a tax return will cost $9,000 then I bill them 9k, regardless of the WIP.

If the WIP runs significantly over then I’ll be on the team’s ass to figure out why so we can hopefully bill for any out of scope work and minimize write offs. Having to explain significant write offs sucks to say the least.

If the WIP is significantly under budget then I’m concerned that people might be eating time, but I’ll still take the write up rather than giving the client a break, odds are we were over budget in prior years and now we’re making up for the earlier losses in the current year.

Thank your for clarifying. You are correct that older partners think tax returns can be done so quick, but they don’t factor in the time it takes to bring it into the software or even adjusting to the new software. I’ve been given 2-3 hour budget for a brand new client with new software and before I even started I told the partner it will take 2 hours just to bring in the numbers into the new software and also ensuring the carryover numbers are accurate in the tax software. I have enough experience to explain, but a new staff would be freaked out with a budget so far off and also just being new and not being able to explain the overage competently.

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